What is the difference between a whitepaper and a yellowpaper?

Two common terms you will often encounter when researching cryptocurrency projects are “whitepaper” and “yellowpaper.” Both refer to informational documents that outline the main features, technical specifications, and goals of a project, but there is an important difference between the two — which you may need to be aware of as a potential investor.

In this AAG Academy guide, we’ll explain what whitepapers and yellowpapers are in detail, and provide examples of the two to make them easier to understand. We’ll also answer some of the most common questions around these two important terms.

What is a whitepaper?

A whitepaper is an official technical document that provides detailed information about a cryptocurrency project or organization. It is typically published during the early days of a project’s official launch, or just before it, and its primary purpose is to outline the project’s fundamental characteristics. This usually includes how it operates, its purpose, and its goals.

Many whitepapers highlight a certain problem and then explain the proposed solution. For instance, Bitcoin’s whitepaper, originally published in 2008, underlines the various flaws with traditional fiat currencies, then presents plans for a digital alternative that is designed to address these issues. It explains the technology behind the project, and how it operates.

Most whitepapers follow a typical structure, which starts with an introduction to the project. They often conclude by summarizing the project’s future plans, or key goals that it hopes to achieve. This could be anything from providing an alternative to cash, like Bitcoin, to solving a problem with existing blockchain technologies, like Harmony.

A whitepaper may also be used as an opportunity to explain unique or unconventional aspects of a project so that they can be understood by others. They may also introduce the project’s team or creators and detail their expertise. As many whitepapers are used as a way to market a project and attract investment, these things can be particularly important.

Whitepaper example

Bitcoin’s whitepaper, which we mentioned above, is a terrific example because it was the world’s first cryptocurrency project. Published on October 31, 2008 under the pseudonym Satoshi Nakamoto, it is titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” It is just nine pages long, but it explains Satoshi’s vision for an alternative to traditional currencies in detail.

The document covers Bitcoin transactions, the blockchain technology they rely upon and its proof-of-work (PoW) consensus mechanism, and the network design. It even explains things like payment verification, Bitcoin’s privacy protection measures, how new coins are generated, and the calculations used to process a new block of data.

Other whitepapers are even more detailed. For instance, the original Ethereum whitepaper, first published by Vitalik Buterin, the project’s founder, in 2014, details things like the mining process, messages and transactions, code execution, fees, decentralized applications (DApps), and decentralized autonomous organizations (DOAs).

Whitepapers for newer cryptocurrency projects don’t tend to be as detailed as these since we have a better understanding of blockchain technology today, so they don’t need to explain every little detail anymore. What’s more, a large portion of new projects that launch today are built on existing blockchain networks, such as Ethereum itself or an alternative like Solana.

It should be noted that whitepapers are not exclusive to the cryptocurrency industry. They have long been used by startups, corporations, government agencies, and various other types of organizations since long before cryptocurrency was invented. And while most whitepapers follow a similar structure, there is no official template for writing them.

What is a yellowpaper?

A yellowpaper is very similar to a whitepaper in that it explains the workings and details of a cryptocurrency project or organization of some kind. The big difference between the two is that while a whitepaper is designed to be read by anyone who’s interested in reading it, a yellowpaper lays out the scientific details of a project and is therefore even more technical.

Yellowpapers tend to focus exclusively on the fundamental specifications of a project, such as how its blockchain and network will function in great detail. They will usually explain any research or technology that is being explored, and will often leave out non-technical aspects of the project, such as its future goals or objectives.

Rather than being used as marketing tools to promote a project or to attract the attention of new investors, yellowpapers are mostly created with future collaborations in mind. They are essential for other developers or blockchain organizations that may want to use the project’s technology in the future, perhaps for building things like Layer 2 scaling solutions.

Yellowpaper example

Yellowpapers aren’t as common as whitepapers because most cryptocurrency projects, especially those built on top of existing blockchains, simply don’t need them. However, they are available for some larger, well-established projects that are open-source. Again, Ethereum is another great example since its network is used by so many cryptocurrency projects today.

Ethereum’s official yellowpaper is available as a 41-page PDF, and it is packed with mathematical formulas that explain every aspect of the network’s operations. These are the kinds of details you need to know if you’re developing a project, DAO, or DApp that will run on Ethereum, but for the vast majority of cryptocurrency enthusiasts, they’re simply not necessary.

References

• Whitepaper
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• Yellow Paper
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• What is yellow paper