What's the Difference Between Whitelisting and Blacklisting in Crypto?

Jun 15, 2023

Crypto Basics

A crypto wallet allows you to store, receive and transfer your crypto. But have you heard about crypto wallets getting whitelisted or blacklisted? Whitelisting and blacklisting are tools a team uses to control specific actions performed in a contract.

In this post, we will dive into what that means and the good and bad purposes they are used for.

What Does a Whitelist Do?

A whitelist is where a team flags specific wallet addresses to allow that wallet to perform certain actions outside the contract's usual rules.

First, let's take a look at the pros of whitelisting:

The best positive examples of this are the whitelisting of the developer, marketing, and exchange wallets to be exempt from taxes.

Now, for the cons to whitelisting:

While the above are positive, there are also some ways a whitelist can be used negatively. An example of this would be the whitelisting of a bot to be exempt from taxes. Investors are now potentially trading with taxes, while the bot has no taxes.

As you can see, a whitelist can be used for both good and bad purposes. While the Quick Intel scanner can tell you if the team can whitelist, further research on the team is required to understand how they intend to use this tool.

What Does a Blacklist Do?

A blacklist is the opposite of a whitelist. A blacklist prevents wallet addresses from performing specific actions. The action in question is typically the ability to buy or sell.

First, let's take a look at the pros of blacklisting:

The best positive example of this is blacklisting a bot that's causing disruptions in the token's chart. Blacklisting can also help prevent fraud, scams, and other illegal activity by tracking suspicious wallets and limiting their capabilities.

Now, for the cons to blacklisting:

One of the main detrimental ways it is leveraged is similar to honeypot scams. A team is capable of blacklisting anyone who buys, which makes it impossible to sell. Some people will call this a honeypot, but it is slightly different.

Another thing you may see on the Quick Intel scanner is if the contract has a "Potential Multi-Blacklist," which allows a contract to blacklist multiple addresses at a time. This is called out separately, as blacklisting is normally only required for a single wallet address at a time. A multi-blacklist function may require additional discussions with the project to understand why they have this capability.

How Can I Tell If a Contract Has a Whitelist or Blacklist?

Quick Intel's scanner not only displays a simple "Yes" or "No" for the ability to whitelist or blacklist addresses but also informs you if these actions can be completed after the contract is revoked. This information is displayed in an easy-to-understand manner and provides additional information to help you understand what the project is capable of.