BitcoinMadeClear

How do other coins differ?

Other coins can use different rules and serve different purposes. Ethereum runs programs on a blockchain. Stablecoins aim to track a reference value. Neither is the same as Bitcoin.

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What is Ethereum?

Ethereum (ETH) is a platform for smart contracts: programs on a blockchain that carry out written rules.

Ethereum moved from proof-of-work to proof-of-stake in September 2022. This change is called the Merge.

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Does a stablecoin always stay stable?

No. A stablecoin is a token designed to track a reference, such as the US dollar. It can lose its peg, meaning it moves away from that reference value.

Look at the issuer's reserves and redemption terms: what supports the token, and who can exchange it with the issuer for money? The word “stable” alone is not a guarantee.

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Who gets to add the next block?

Proof-of-work and proof-of-stake are two different approaches. This picture shows the main difference, rather than every technical step.

Proof-of-work

  1. Miners use computing power and energy
  2. A miner proposes the next block

Used by Bitcoin

Proof-of-stake

  1. Validators lock up coins
  2. A validator is selected to propose the next block

Used by Ethereum

Both follow their network's rules for adding blocks. This difference alone does not tell you whether a coin is safe.

What are three red flags for a new token?

  1. Can you find a working product?

    A website and a token name are not proof that anything works. Many tokens have no working product.

  2. Are promoters pushing you to hurry?

    Pressure and sudden excitement can be part of a pump-and-dump. Pause instead of treating attention as evidence.

  3. Is it unclear who can take the funds?

    A rug pull is a scam in which creators take funds or abandon a project. If control is unclear, treat that as an unanswered question.

These checks are a starting point, not a test that can prove a token safe.

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