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What Is A Masternode Coin And How It Benefits The Crypto Investors?

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Understanding cryptocurrencies and their technicality could be a little hard for an uninitiated but not impossible. The enigmatic world of blockchain has been created by so many  subtleties that it may confuse even an expert.

The reason of this complexity is the ambiguity of elements used in creating crypto currencies which are often misinterpreted. That happens probably because cryptos have two different sides, one is its technical aspect which is all about machinations and another is about its face-value when a cryptocurrency is created and issued in the market.

So far, cryptocurrency has been a subject of investment to a large set of people instead of a technology. Undeniably, it is a quite a lucrative and foresighted investment. To an investor, it is not essential to know each and every technical aspect of a crypto coin, but it will surely give an upper hand since the very basis of digital currency is technology.

Masternode is one such thing that an investor must know about as it helps determining the value of that coin real-time. Masternode is nothing but a cryptocurrency full node which retains the full copy of the blockchain in the computer wallet as well. It is similar to Bitcoin full nodes which keeps its blockchain up & running.

Having drawn a likeliness to the normal nodes, masternodes are actually different from the normal ones. Their attributes make them varied as they perform several other functions apart from just keeping the full blockchain and relaying blocks/transactions as a full node does in Bitcoin/Litecoin.

Masternodes are differentiated due to these characteristics:

  • Maintained privacy of transactions.
  • Executing instant transactions.
  • Adherence to governance and voting.
  • Budgeting and treasury system in cryptos.

In order to make a decentralized network, masternodes always communicate with other and are often referred as MN.

Note: The characteristics mentioned above are mostly common in all the masternodes, but may vary in a few cryptocurrencies depending upon how masternodes have been implemented. However the basic functions remain the same.

How does a Masternode work?

In terms of functionality, masternodes work in the same way full nodes do. Although, an entry barrier works in order to make sure the system doesn’t get malicious. To execute a masternode in accordance with a particular cryptocurrency you have to set entry barriers.

The purpose of putting entry barriers is to ensure that a masternode owner doesn’t cheat or corrupt the system and it is deployed at the point where the masternode operator has something at stake in the whole game.

These barriers are deployed to make sure that a masternode owner try to  and even if he chooses to do so, his own HODLings will be devaluated as a penalty.

Now that we know the basics of masternode, let’s delve into it more to know what all things are required to set it up:

In order to start, you need a minimum amount of coins of that particular crypto. For instance, 1000 DASH units and for PIVX MN you need 10,000 PIVX units, minimum number of units may vary from crypto to crypto.

  • A VPS or server to host that wallet for 24/7 is also required.
  • A dedicated IP address for VPS or server.
  • Some storage space to save the blockchain.

These are the basic requirements which remain the same for most of the masternode coin developers.

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You might wonder that to start earning through masternodes, you need to first invest by procuring the above mentioned things. That’s when it gets more interesting because you will not have to spend money to start earning through masternodes.

How Masternodes help investors in earning?

Needless to say, masternodes are very useful for crypto investors because of running a masternode you are incentivized. It is more or less like earning a monthly or weekly interest on your crypto holdings.

An MN operator could earn through different cryptocurrencies offering diverse incentive models varying from monthly to weekly proceeds. It is also called smart passive income.

You would definitely find the option of earning, if you have invested in a cryptocurrency that allows you to run a masternode.

Choosing the currency wisely is another thing that needs to be considered when you are solely investing for running a masternode. Comparing the percentage yield against the investment is another way of calculating ROI which should be smartly done.

There is a multitude of cryptos in the market that allow you to run a masternode but not all of them provide handsome incentives.

What’s Next?

Having said that, how to choose the right cryptocurrency for running a masternode or may be interested to know how to identify if the crypto in which one has already invested allows running a masternode.  You can use these links to check if your crypto allows you to host an MN or not.

  • Masternode Pro
  • Masternode Currency
  • DASH Masternode
  • PIVX Masternode

We hope that you find this article helpful to make your way around masternodes.

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