It is the dream of every new token to find its way into the coin market. With very few utility altcoins achieving their intended purpose, the Holy Grail for most coins is to reach a high level of speculation on the coin market to drive up the profitability of their assets post-crowdsale.
With traditional exchanges, getting listed is a sign of market interest. For NASDAQ, for example, this is demonstrated by having a minimum number of publicly-traded shares, having a minimum BID or closing price for those shares, and a minimum number of shareholders representing a trading average of more than a million over the past year. So, how are altcoins listed?
The Rules of the Game
Altcoins are not so different from stock in the sense that they must demonstrate a market interest in order to be selected for listing. This definition differs depending on the exchange.
For GDAX, the exchange managed by the wallet-provider Coinbase, the criteria is defined in its Digital Asset Framework. The framework looks at criteria such as:
- how the coin was sold
- whether all parties are being economically incentivized
- whether there is driving demand for the asset
- whether Coinbase can legally offer the asset
To date, the only altcoins that satisfy GDAX's requirements are bitcoin, Bitcoin Cash, Ether, and Litecoin.
Bitfinex, another major coin exchange, posts on its website:
<p><em>" factors go into our decision-making process when considering adding a new token to Bitfinex. Some of these factors include user requests, shareholder interest, market capitalization, token design parameters, and a thorough assessment of the token's development process; including, but not limited to, the team behind the coin and their strategies for solving technical and nontechnical problems." </em></p>
Bitfinex's criteria for inclusion is less strict than GDAX and the exchange accordingly has over 20 coins available for trading, including bitcoin, Bitcoin Cash, Monero, IOTA, DASH, and Ripple.
Bittrex divides its review process into a preliminary review, wherein a Bittrex employee determines if a full listing review is warranted, and the full listing review. This full listing review includes a legal compliance review and evaluations of the coin's usefulness, novelty, and demand, as well as the technical reputation of the coin's team. Bittrex's criteria permits the listing of hundreds of different currency-coin pairings.
Before investing in ICOs, do your research!
Understanding What Exchanges Look For
If, as an investor, your goal is to focus on ICOs that have tokens that would likely end up on the market, there are certain indicators to look for:
- First, most exchanges avoid securities-type coins. This is because of questions about legal obligations under the national regulators. Additionally, new currency and reward-types coins are unlikely to be added, due to a desire to have new coins have a demonstrable purpose.
- Liquidity is king. A token that does well during its ICO but falls off afterward is unlikely to be listed. It is important to pick ICOs that are likely to have sustained demand.
Conducting the due diligence needed to evaluate the technical and market potential of any considered new investment is always the wise course. The more you know, the better your investment choices are likely to be. Read Bitcoin Market Journal and learn to invest like a pro!