Many people are starting to unlock (jailbreak) their iPods and iPhones, which means that once the devices have been jailbroken, any application can be installed for free. I'm going to tell you how to jailbreak an iPod with version 4.2.1.
Steps

Step 1. Make sure your iPod is version 4.2.1
You can do this by unlocking your device and clicking "Settings" on the first screen. Then tap on "General" and go to "About." Scroll down until you find the version and next to it, the version number you have. If it's 4.2.1 read the following instructions to unlock your iPod.

Step 2. Go to www.greenpois0n.com (page in English) which is a jailbreaking website from where we can do our work in an easier way
On the right hand side of the page you will see something that says "Jail Firmware 4.2.1" and just below it will be two options. Click on the second one that says "Greenpois0n RC6.1 (win)" and install it.

Step 3. In a pop-up window the options will appear, one that says Greenpois0n and then on the right under something that says README
Click Greenpois0n and then another window will appear saying something like this: "Prepare to Jailbreak". Click on that, but first make sure you have your iPod already plugged into your computer's USB port.

Step 4. The wizard will guide you through 4 easy steps:
"Ready to go", "Press and hold the sleep button", "Keep pressing the sleep button but keep pressing the home button" and "press the suspension button to launch but keep pressing the home button." Yes You have followed the instructions correctly, then a little window will appear saying “Jailbreak.” Click on that window to finish.

Step 5. After the process is complete the iPod should blink white, then it goes back to a black screen and starts showing a bunch of white letters on the screen
Wait for this to finish. Then the Apple symbol should appear, preceded by the jailbreak signal, which is an image of a skull.

Step 6. Go to the loader after your device has finished booting and hit "Install Cydia"
This is where you go to download Installous, which can be obtained from your applications.

Step 7. After Cydia has been installed, it opens and in the background there will be some buttons, tap on “Manage”
Touch "Sources." At the top right, tap on "Edit". At the top left, click on "Add". In the box, type http://cydia.hackulo.us/. Then, click on “Add source”. Let it load, and then go into the "user section" and click on the link that says Hackulo.us. Scroll down until you see Installous, which is where you can get all the apps.

Step 8. Open Installous, which should now be on your iPod, in the area where you have your other applications

Step 9. From here you can navigate and search for the applications that you like the most
If you see an application that you would like to get, just open it and click "Download." There will be a lot of links, and generally they all work quite well, especially the first ones. If clicking one opens a new page, then you know it's working. Click "Start download" and the rest you know how it works. Happy Jailbreaking!