O nce a mega-investor said, if you don’t find a way to make money while you sleep, you will have to work until you die. And when it comes to the cryptocurrency world, people say only those who can analyze the marketplace finely or are day traders can earn money. But that’s not true!!
In fact, there are several other ways by which people can gain profit & earn a handsome amount of money. The best thing about this is that you can opt the suitable way that works for you and can accordingly play with your reward/risk ratio.
One such method of earning in the crypto world is through running a master node, but before that, it is essential to first understand the idea behind the master node.
Dash was the first cryptocurrency which brought the concept of a master node in the spotlight and after that, it started gaining popularity. It’s quite exciting to see masternodes form such an essential backbone of the network. Operators receive financial rewards for running this node; however, they also need to provide a financial stake of their own.
Idea Behind The Origin of Masternode:
Before heading towards the concept of masternode or what is masternode it’s important to understand how the Dash ecosystem works. Dash is a trendy privacy-centric altcoin that utilizes a proof of work system similar to the one found in Bitcoin. However, that is only a part of the network that allows a user to earn money. Not everyone is competent to contribute to the network as a miner that’s the reason why masternodes was introduced.
What Is A Masternode?
A masternode is an extraordinary decentralized server that performs a number of functions on the blockchain network like instant sending, and coin mixing to add privacy of transactions in the network.
They also assist the decentralized management and administration of the distributed network such that the network will not favor any country, geography, company or person because they have additional responsibilities such as voting on development matters and issues. They ensure a decentralized budgeting system and an unalterable proposal and voting system.
Masternodes play a very important role and are, indeed, a backbone of the network. They are the resources or services which can be provided by anyone on the blockchain network as far as the person has the required financial and hardware capability. They usually require a sizable investment in order to run. But this is where incentivization comes into play, the individual providing these services get rewards and dividends in form of the coin, on a periodic basis defined by the cryptocurrency company.
They are remunerated by portions of block rewards in whatever given cryptocurrency they’re facilitating.
Masternodes enable the following services:
- InstantSend: Instant transactions when compared to Bitcoins where it takes around 10 minutes to confirm the transaction.
- PrivateSend: (Private Transactions): In contrast to Bitcoin transactions where only the identity of the addresses is anonymous.
- Decentralised Governance: Each has a right to vote for the projects submitted by the members of the community.
How Do Masternodes Work?
Like proof of stake, masternodes depend on investing a certain amount of a given currency within the network. To establish a masternode, you’d first need to buy a substantial amount of the currency. For example, a masternode for Dash requires 1,000 DASH.
You can download your currency’s core wallet and use it to create a masternode. After you have set up the computer as a server, the main wallet adds your computer as one of many nodes that supports the blockchain. Once a masternode is live, it accommodates a unique series of functions, such as instant and/or anonymous payments. Masternodes are also given voting rights on proposals. Each masternode has the authority to cast one vote & this vote is utilized on budget proposals or important decisions that affect Dash. It is not considered as standalone although it always communicates with other nodes to create a decentralized network.
As reimbursement for their troubles, masternodes share regularly 45% of block rewards with the blockchain’s miners. The other 10 percent goes to the blockchain’s treasury account and operators who are the in-charge of voting on suggestions about how these funds will be assigned to develop the network.
It’s noteworthy that simply holding the necessary amount of currency for a masternode is not enough to run one. Each currency has its own guidelines for maintaining a masternode, and if these conditions aren’t met or the currency is moved from its staking position, a masternode will cease operating.
Crypto-Currencies That Rely On Masternodes
Some notable masternode coins include:
- Dash (DASH)
- Pivx (PIVX)
Dash (DASH): Dash is clearly the largest and it has been in the top 10 most popular cryptocurrency to rely on masternodes within its decentralized network.
Stratis: It’s a cryptocurrency project that works as a “sandbox” where developers & companies can learn the ropes of blockchain technology. As a part of this set-up, Stratis just launched a masternode product on the major Microsoft Azure market.
PIVX: It is another upstart cryptocurrency project, just like the Dash that makes the use of masternodes technology. For users of this network, 10,000 PIVX should be deposited to the applicable address in order to be rewarded with a masternode.
Conclusion: Masternode application is flexible. It compensates for proof of work’s limitation and functions almost like a buffed-up version proof of stake systems. They guarantee better stability & network credibility, as larger dividends & high initial investment costs will make it less prone that operators will discard their position in the network If you can meet the resources then it’s definitely going to be a promising opportunity, and it will be exciting to witness what they will recommend to investors & enthusiasts in the coming years.