We all know that Blockchain is a distributed ledger that is the backbone of the cryptocurrency ecosystem that we’re experiencing today. Companies and consumers are making money through cryptocurrency trading and by launching new technologies that leverage the ecosystem.
Running a Masternode is another way that many entities are generating revenue in the crypto-space. So, what is a master node and how do you profit from one.
Read on to find out.
What is a Masternode?
Any cryptocurrency needs distributed nodes to function effectively. The entire network is made up of different nodes on which a piece of code is stored safely. Through this technique no single node or computer has all the power. That’s the beauty of the Blockchain system. You need a full node if you want to host a copy of the Blockchain. You also support the network in its growth this way.
A Masternode is a full node in cryptocurrency. It’s a full node that supports the network by hosting an entire copy of the Blockchain in real-time. The Masternode receives a crypto coin as a result of its hosting service. Many people may not have known about this concept before, but now it’s a growing knowledge in the crypto space.
An Alternative to Mining
Although a lot of your bandwidth is taken up by the network, it’s a positive alternative to mining for coins. Mining has become increasingly competitive, as there are various miners across the world. Different cryptocurrencies will have their own MN (Masternode) setup, incentivizing users accordingly. Comparing the yield to the investment should help you decide which currency to work with. Setting up a Masternode does hold some technical challenges but is a viable alternative to mining for coins.
The Benefits of a Masternode
Apart from the reward that you are receiving by being the Masternode, there are other advantages to becoming one. It increases the privacy of all transactions occurring. It also enables instant transactions, depending on the strength of your bandwidth. It allows you (the user) to take part in governance related decisions and gives you a voting right. If there are many Masternodes in a currency, they may start to bond together making the space more organized over time.
What Are the Requirements to Setup a Masternode?
For someone to start a Masternode, they need to have a minimum amount of that coin in their account. For example, PIVX requires at least 10,000 PIVX units in your account to qualify to be a masternode. This is a significant investment, which is why few entities do it. Each coin will have their own unique masternode perquisite.
In addition, you need to install a desktop wallet and connect it to the Blockchain, after which you can transfer the coins to the wallet itself. Your connection also requires a VPS or cloud server to host the wallet with 99% uptime.
Another requirement is a dedicated IP, which is something that most VPS and cloud servers offer anyways. You also need a lot of storage space dedicated for the Blockchain.
After you’re setup, you can run the program in the background. Ensure that you perform server maintenance and repairs if necessary.
What Cryptocurrencies Have Masternodes?
You can become a Masternode for more than 400 cryptocurrencies. The most popular among them are Dash (DASH), Bata (BTA), Crown (CRW), ChainCoin (CHC), and PIVX (PIVX).
How Do I Choose the Right Crypto to Become a Masternode?
It’s important to understand the intrinsic value of crypto outside of being valuable as a Masternode. You can research about where the coin is being used and what economies are being driven through that coin. You can also understand the levels of fluctuation and what growth it has seen over time.
All of these research points will help you make an informed decision. Investing in a Masternode requires the same amount of research as investing in long-term trading. You need to know the product you’re buying.
You should always calculate your ROI too determine if becoming a Masternode for a particular coin is worth it (since you probably can only afford to choose one coin.) The rewards systems should be transparent and there should be other Masternodes in the Blockchain with you. You can even reach out to them via social media and talk to them about their experience with the currency.