Blockchain technology, otherwise known as Distributed Ledger Technology (DLT), has brought with it a plethora of new words and definitions. Masternode is one of those new words.
What is a Masternode?
A Masternode is a PC wallet or crypto-coin node, used as a Proof-of-Service algorithm, which safeguards a copy of the blockchain in real-time. It works like a regular Bitcoin full node. DASH first invented the Masternode back in 2014, which has become popular among investors. Why?
Partly because DASH offered 45% of it’s block rewards to be paid to all masternode holders. Since then, lots of digital currencies have decided to use the masternode function, cryptos like: NavCoin, PIVX, ION, Neutron, Bitsend, Zcoin etc.
Types of Masternode
Generally speaking, there are 3 common known types of nodes, which are:
- ordinary nodes,
- full nodes,
Each one has different responsibilities and privileges. Ordinary nodes, for example, are the backbone of any cryptocurrency. They help secure the blockchain and prevent double spending.
Regular nodes are the miners in the PoW consensus model, and the staking wallets in the PoS consensus model.
Full nodes, on the other hand, are different in that they hold an entire copy of the blockchain in real-time (ordinary nodes don’t do this), and they can connect to over 124 other nodes (whereas ordinary nodes can only connect to 8).
And finally, there are the Masternodes, which are basically full nodes with extra abilities. They provide different services, such as Private Send, Instant Send, and storing the entire blockchain, and for so doing, they receive block rewards. It’s worth noting that masternodes are essentially full nodes in the PoW and PoS consensus methods.
Investing in a masternode can be a sizeable investment, but one is essentially investing into a passive income generator. You’ll need to check with the masternode-enabled cryptocurrency to see how they give out rewards to masternode holders, and of course do your own substantial research before investing any money into setting up a masternode.
If you choose to move forward with setting up and running one, you’ll need a minimum amount of that particular cryptocurrency. For example, DASH requires you to have a minimum of 1,000 DASH, whereas PIVX requires you to have a minimum of 10,000 PIVX. You’ll also need a server or VPS to host the wallet 24/7. You’ll also need a dedicated IP address, as well as enough storage space to save the blockchain.
There’s much more that could be said about masternodes, much of which you’ll find in the infographic below.
Hope you enjoy,
The Cyberius team.
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