by 1 comment on "White papers: the good, the bad & the ugly"

White papers: the good, the bad & the ugly

Over the weekend I had a rare experience: one my tweets went viral. It was an off-the-cuff and slightly pompous tweet about the role of white papers in the cryptocurrency ecosystem:

I’d tweeted that in response to a blockchain bro at South By Southwest, who had opined: “Read the white papers. Everyone and their mom is just pumped up about the wrong thing. It’s not my personal passion to educate people’s aunts who don’t understand math.”

That quote riled me up because the type of mathematics common in ICO white papers is beyond the grasp of anyone who isn’t a mathematician or a skilled blockchain programmer. For example, in my review of Filecoin I highlighted the complex mathematical formulas in their white paper. I would challenge anyone – let alone a SXSW bro – to explain to me what those formulas mean.

That said, I’m not suggesting Filecoin and others shouldn’t include mathematical proofs in their white papers. Satoshi Nakamoto’s Bitcoin white paper from 2008 includes mathematical formulas. Even though I struggle to understand the equations, I’m glad they’re in the white paper because I trust independent mathematicians and programmers to verify the math. Likewise if I’m looking into a company like Filecoin, I search for informed, specialist, feedback on the math. That’s really the best I – and most other analysts – can do, short of going back to University and studying for an advanced mathematics degree.

However, what I am arguing for is a separation of the math (and other programming complexity) from the business case for cryptocurrencies and ICOs. Ideally companies should use their websites to explain, in simple terms, what it is they hope to achieve using blockchain. You shouldn’t be asking ordinary investors or potential users to read through a complex white paper in order to understand the value proposition for your business.

Nathaniel Whittemore had a good suggestion:

I like that idea of a “lite” paper, focusing on the business plan and how people will use the end product.

In my reply to Nathaniel, I noted that the two-minute videos some startups do – for example, Brave and Po.et – are often very effective and succinct explainers.

I also think the media has a role to play here, especially niche media like Blocksplain. Indeed, the name of my site tells you this is precisely what I aim to do: explain blockchain technology and put it into context.

Yes, there is a place for white papers. But they should primarily be focused on proving the technology platform is sound. That’s what Satoshi did, in a very clear and concise way.

Ethereum is an interesting case study, because it has multiple white papers. Towards the end of 2013, Vitalik Buterin released the original white paper. Although it’s technical and has a lot of programming language in it, a dedicated layperson can follow the logic and see the overall vision. Then Gavin Wood followed up in 2014 with a full technical specification, which was nicknamed the “yellow paper.” Wood’s paper has a lot of highly complex math in it, so it cannot be understood by most of us. But that’s fine, because the target audience of the yellow paper was developers.

It’s all about communicating at the right level for your intended audience.

The problem is, many subsequent white papers in the blockchain ecosystem don’t satisfy any audience.

Last year Preston Byrne blogged about the Basecoin white paper, which he summed up as “a lot of citation-needed, freshman-dorm-room economics.” That prompted Elizabeth Stark, an ex-Stanford and Yale teacher and currently CEO of Lightning Labs, to tweet:

The lesson for those startups is: get the basics right first and then hire someone to write the white paper.

As for the guy at SXSW who arrogantly told everyone to “read the white papers” because he can’t be bothered explaining the math to us:

Firstly, I’d wager that you don’t understand the math in the Filecoin white paper or Gavin Wood’s Ethereum yellow paper.

Secondly, you’re just plain wrong. If blockchain companies want real people to buy their tokens and/or use their products, it’s up to them to explain why and how to do that without using math. Because math is only convincing if you understand it, or at least trust there is legitimate independent verification. With most cryptocurrencies (almost all apart from Bitcoin and Ethereum, I’d suggest), there simply isn’t enough external verification to trust the math.

So blockchain companies must make an effort to explain their technologies in plain language, or in video. To those companies: if you’d like help improving your website communications or editing your white paper, reach out to me because I offer consulting services to address this need.

 

1 Comment on "White papers: the good, the bad & the ugly"


  1. Great points raised here Richard! I’m working with a number of blockchain startups and I always come at comms and white papers from the perspective that the proposition not only needs to be immediately identifiable, but similarly, the tech needs to make sense from a use case perspective — to anyyone even vaguely interested.

    There will always be an inherent amount of complexity when you scratch beneath the surface of any blockchain project, but it’s crucial that this doesn’t become a stumbling block to would be users and investors. The marketing ‘sizzle’ needs to be up front and centre, but the ‘sausage’ needs to be there for those who want to tuck in (so to speak…) to the tech itself.

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