A whitelist is a mechanism that gives specific people, institutions or computer programs preferential access to a certain service, privilege or information. In general, a whitelist allows something in advance. This is the opposite of a blacklist, which prohibits something in advance.
In real life, we encounter whitelists, for example, when signing up for newsletters and other mass emails from various companies. We thus consent to receiving them. The companies’ email addresses are then stored in our whitelist and incoming messages from them are not marked as spam. However, the term ‘whitelist’ also has another meaning. It is often used for LAN connections, firewalls, and in ad blockers on the Internet. In the world of cryptocurrencies, a whitelist is tied either to initial coin offering (ICO) events or to a list of allowed addresses for cryptocurrency withdrawals.
An initial coin offering is one of the forms of financing companies or projects using cryptocurrencies. These are mostly public projects financed with the help of crowdfunding. The ICO authors usually publish their offer, i.e., the possibility to buy their tokens or non-fungible tokens (NFT), on social networks or other channels for a certain number of people. If the company wishes to sell, for example, 100 tokens to 100 people, they need both to identify them in some way and also to limit the purchases of people who want to buy more than 1 token. They can do this through a whitelist, using which they invite all the interested parties to provide the addresses of their crypto wallets, i.e., personal data. The specific company will then enter the people who allowed access to this information into its whitelist. These people can subsequently purchase tokens.
In the world of crypto, a whitelist can also represent a list of crypto addresses that specific users consider safe. Services using a whitelist (e.g., exchanges such as Coinbase and Binance) will subsequently allow us to withdraw funds from accounts only to addresses that we have previously approved and included in our personal whitelists. This is a kind of protection against hacker attacks.
Sources: coinmarketcap.com, academy.binance.com, www.quora.com