A masternode is a full cryptocurrency node, or full node wallet that keeps the full copy of a blockchain in real-time.
Crypto masternodes may not really be the same with normal nodes found in computer systems due to its functionality.
Masternodes are somehow different from that of Bitcoin, or Litecoin wallet nodes which only keeps full blockchain and relay blocks.
It also performs several other functions.
Functions of a cryptocurrency masternode
- Increasing transaction privacy
- Instant transaction availability
- Voting and governance participation
Enabling budgeting and treasury system in cryptos, these masternodes always communicate with each other to form a decentralized network.
Just like that of blockchain, but they’re always referred to as MN.
They vary from crypto-to-crypto, depending on how the masternodes are been implemented, but more or less, they still perform the basic functions.
How do masternodes work?
Once a masternode is hosted and live, it accommodates a unique series of functions, such as instant and anonymous payments.
They also enable a decentralized governance system that allows node operators to vote on important developments within the blockchain.
As compensation for their troubles, masternodes typically share an equally 45% of block rewards with the blockchain’s miners.
The other 10% goes to the blockchain’s treasury fund, and operators are in charge of voting on proposals for how these funds will be allocated to improve the network.
It’s important to note that simply holding the requisite 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 the masternode will cease operating.
Crypto masternode hosting
Masternode hosting is a process of setting up a VPS server dedicated on a permanent IP to run a masternode operation.
Hosting cryptocurrency masternode is an extremely convenient way to generate passive income.
It utilizes the power of a web server in order to strengthen, and as well, streamline the transaction process for a specific crypto ecosystem.
By investing funds into a crypto wallet, it allows the server to become part of the decentralized infrastructure of that currency.
In doing so, the owner of the masternode hosting earns a substantial ROI.
How do I set up my Masternode?
Masternodes can actually be run by anyone. However, there are rules that follows up to ensure that the system doesn’t get malicious to the investors.
The entry barrier is that one needs to collateral certain units of the particular cryptocurrency that they want to run a masternode.
This is done so to make sure that masternode owners don’t engage in cheating, or corrupting the whole system.
It’s practically impossible for a masternode node owner to cheat, because the person has a stake in the system.
This particular take is retained as a collateral, while running the whole system.
Even if the operator tries to cheat, the punishment is always to have their own cryptocurrency holding being devalued.
Now that you have understood the whole concepts, rules and regulations that goes with running a masternode.
Let’s talk about the requirements to set up one below:
- You need a minimum amount of coins of the particular crypto node
- Masternode hosting requires a VPS hosting for 24×7 running
- A dedicated IP is strictly needed for running a masternode
- A cloud storage space is needed to store the blockchain
- Major masternode installer.
Now, I know you’re already getting overwhelmed with the whole process and guidelines needed to follow before getting to set up a masternode to make money with crypto.
Well, it’s already time we start talking about how to earn income with this thing. But let’s discuss how useful it is for cryptocurrency investors.
How to choose masternode coins
Masternodes are very useful for cryptocurrency investors, because of the incentives that can be gotten.
A masternode owner earns monthly or weekly interest ROI for HODLing a particular coin in the system.
Mind you that each cryptocurrency has its own incentive models through which you can earn more cryptocurrencies as an MN operator.
If you’re an investor of any cryptocurrency that allows you to run masternode, I will personally advice that you explore this option as it’s known as a cool Passive Income.
Make sure to choose the right cryptocurrency, if you’re going to investment in crypto running masternodes for profit.
Try to always compare the percentage yield or Return On Investment (ROI), so you’ll know your expected earning before hand.
Best reliable masternodes coins
Currently, there are many cryptocurrencies that allows investors to run masternode, but not all of them are worth the stress anyways.
There are numerous projects that make use of masternodes in their networks, but many of these projects are smaller and not widely known in the ecosystem.
Notable masternode coins are:
- Block (BLOCK)
- Bata (BTA)
- Crown (CRW)
- ChainCoin (CHC)
- Dash (DASH)
- Diamond (DMD)
- ION (ION)
- Monetary Unit (MUE)
- Neutron (NTRN)
- PIVX (PIVX)
- Vcash (XVC)
- XtraBytes (XBY)
By now you should be able to identify good masternodes coins to base your crypto masternodes for making profit.
Try not to cheat the system, to avoid loosing your cryptocurrency investment (stake) in running your cryptocurrency masternode.
You can buy any of the masternode coins from strong, theft-free Binance exchange platform, as they’re the best in the market.
I will also advice you to get a hardware wallet to safely secure your funds from loss due to theft or hack.