It’s important to understand, though, that not all altcoins are just alternate versions of Bitcoin. Some altcoins use different algorithms for Bitcoin. Stakers are people that verify transactions for rewards, just like miners. For example, Factom is an altcoin that uses PoS (Proof-of-Stake). But instead of racing to verify a block before anyone else does, they are selected one by one to take their turn. Instead, there are stakers. In PoS, there are no miners. There are some that are very, very different from Bitcoin, and have very different goals/purposes.

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What is Defi 2.0? Many new projects are being built on Ethereum. Its currency is called Ether (ETH). Earlier, we looked at how important smart contracts were and how many possibilities they unlocked for the future. In contrast to Bitcoin, Ethereum is a platform that allows people to build dApps, tokens, and smart contracts. They need Ether to pay for transaction fees on the dApps because the dApps run on the Ethereum blockchain. So, just like the peanut butter jelly sandwich, Ether will never go out of style! Users of dApps built on Ethereum will always need Ether.

The dApps are built to use smart contracts, which is why they use tokens. Tokens always have a price that they can be sold for, which is why some people buy them. Their tokens don’t have to represent a physical thing like electricity or a house, though. They can instead be used to purchase things on the dApp. Either that, or they can be used to get certain advantages – things like discounted fees and voting fees. Some people buy tokens to sell them later for a higher price, instead of buying them to use them on the dApp.

This is all possible because Ethereum introduced new technology to the crypto world when it launched in 2015. This technology is called a smart contract. A smart contract can automatically execute transactions when certain things happen. These ‘things’ (also called conditions) are written into the smart contract when it is created. For example, a condition could be something like “WHEN Peter sends 120 Ether into the smart contract, THEN John’s house will be sent to Peter”.