Cryptocurrencies have taken the world by storm in recent years, offering investors and traders an alternative to traditional financial systems. However, with the growth of the industry, comes the rise of scams, hacks, and fraudulent activities. Whitelisted crypto is a new trend in the industry that aims to combat such issues. It provides a secure and regulated environment for traders and investors.
This article will explore what whitelisted crypto is, the benefits and risks of investing in it, and the process for getting whitelisted.
What is Whitelisted Crypto?
Regulatory bodies or exchanges perform a thorough evaluation process of cryptocurrencies. It is done to determine if they meet specific criteria for safety and legitimacy. Once approved, these cryptocurrencies are known as whitelisted crypto.
The process involves an evaluation of the cryptocurrency by a governing body or an exchange. The process determines whether the crypto meets specific criteria to be deemed safe and trustworthy.
The criteria for whitelisting may vary from platform to platform. Regardless, some of the common ones include the presence of a strong development team, a robust security system, and a legitimate use case.
The platform or exchange adds a cryptocurrency to a whitelist if it meets the criteria. A list of cryptocurrencies that can be traded is authorized.
For example, Binance, one of the largest cryptocurrency exchanges in the world, has a whitelisted cryptocurrency program. It allows users to trade only a select number of cryptocurrencies that have been considered safe for trading.
Benefits of Whitelisted Crypto
- Increased Security: By trading or investing in whitelisted crypto, you can be assured that the cryptocurrency you are dealing with has been thoroughly vetted and deemed safe by the platform or exchange. This means you are less likely to fall prey to scams, fraud, or other security issues.
- Reduced Risk: Since whitelisted crypto is deemed safe and trustworthy, investing in or trading these cryptocurrencies reduces the risk of losing money due to price fluctuations or other factors.
- Access to Quality Cryptocurrencies: Whitelisted crypto is often comprised of high-quality, reputable cryptocurrencies with a proven track record of success in the market. By investing in or trading these cryptocurrencies, you can potentially benefit from their growth and success.
Risks of Whitelisted Crypto
- Limited Options: Since whitelisted crypto is a select list of approved cryptocurrencies, your options for trading or investing may be limited. This may limit your potential for growth or diversification in your cryptocurrency portfolio.
- Dependence on Platform or Exchange: Since whitelisted crypto is approved by a particular platform or exchange, you are dependent on that platform or exchange to trade or invest in these cryptocurrencies. The platform or exchange could experience issues or go out of business. This would affect your ability to trade or invest in whitelisted crypto or it may become compromised.
- Market Volatility: Although whitelisted crypto is deemed safe and trustworthy, it is still subject to market volatility and other external factors that may impact its price or value.
Issues with Whitelisted Crypto
- Regulatory Compliance: Whitelisted crypto may seem like a great option for investors. However, it is important to note that the regulatory process can vary widely between platforms and exchanges. Some platforms may have more strict criteria than others, which could limit the number of cryptocurrencies that can be whitelisted.
- Centralization: Whitelisted crypto can also contribute to the centralization of the cryptocurrency industry. Limiting the number of approved cryptocurrencies gives more power to the platforms and exchanges that control the whitelisting process.
How to Get Whitelisted
Whitelisting a cryptocurrency can take a long time. However, it’s necessary to ensure the legitimacy and safety of the cryptocurrency. The process may vary from platform to platform, but here are some common steps involved:
- Research the Platform’s Criteria: Before applying for whitelisting, research the platform’s criteria to ensure that your cryptocurrency meets the requirements.
- Submit the Application: Once you’ve researched the criteria, apply to the platform for whitelisting.
- Wait for Evaluation: The platform will evaluate your cryptocurrency to determine whether it meets the criteria for whitelisting.
- Provide Additional Information: The platform may request additional information about the cryptocurrency or the development team to make a final decision.
- Await Final Decision: After the evaluation process, the platform will make a final decision on whether to whitelist the cryptocurrency.
For example, Binance’s whitelisting process involves submitting an application, completing a Know Your Customer (KYC) process, and meeting other qualifications. These include having a certain trading volume or holding a certain amount of cryptocurrency.
Whitelisted crypto can provide a variety of benefits, such as increased security, reduced risk, and access to quality cryptocurrencies.
However, it is important to also consider the risks associated with whitelisted cryptocurrencies. Limited options and dependence on a particular platform or exchange are a few things you should look out for.
Thoroughly research the platform or exchange if you are interested in investing or trading in whitelisted crypto. Understand the criteria and qualifications required for whitelisting before investing.
By following the tips we’ve outlined above, you can increase your chances of success in the world of whitelisted crypto.