What makes Ethereum different from Bitcoin?
Ethereum (ETH) is a smart-contract platform. Smart contracts are programs that can carry out rules through transactions. The platform moved from proof-of-work to proof-of-stake in September 2022, known as the Merge.
- Proof-of-work
- Miners spend energy to add blocks. Bitcoin uses this approach.
- Proof-of-stake
- Validators lock up coins to take part in adding blocks. Ethereum uses this approach.
The method for adding blocks does not tell you whether an individual token or app is trustworthy.
Can a stablecoin stop being stable?
Yes. Stablecoins are tokens designed to track a reference, such as the US dollar. They can lose that peg, often called a depeg. The name is a design goal, not a guarantee.
Read who issues the token, what reserves are described and how redemption works. Ask who can redeem, under which conditions and what evidence supports reserve claims. A familiar currency symbol does not answer those questions.
Which token traps should you recognise?
- Rug pulls
- A team attracts interest, then removes access or abandons the project. Ask whether there is a working product and who can change the rules or control funds.
- Pump-and-dump schemes
- Coordinated hype pressures people to act while promoters can sell. Popularity in a chat and a countdown are reasons to question the request.
- Fake airdrops
- An unsolicited token or message sends you to a claim page. Do not follow a link just because a token appears in a wallet. A claim asking for your recovery phrase should stop there.
- Wallet-approval scams
- An approval can give a contract permission to use tokens. Read the asset, permission and spending limit before signing. A wallet connection is not a reason to approve an unexplained request.
What should you check before interacting?
- Can you explain the token's purpose beyond its name?
- Is there a working product and evidence for the claims?
- Who can change the contract or control important funds?
- What network and asset does the wallet show?
- What permission does the approval grant, and to whom?
- Can you leave the page without losing control of your wallet?
Many tokens have no working product. You can leave an unfamiliar token or request alone while you investigate. An urgent message does not create an obligation to sign.