If you are just getting familiar with cryptocurrencies, the blockchain world and are already developing an interest in masternodes, we advise you to first step back a little bit and learn more about Proof of Work, Proof of Stakes and their differences. Indeed, for a better understanding of what a masternode is, we first have to define the environment.
The masternode model has firstly been introduced by Dash in 2015, a famous fork of Bitcoin, as a way to add anonymization.
Masternodes are another way to secure transactions than the two main consensuses: POW and POS even though they are very close to Proof of Stakes. Most of the masternodes are using a double consensus, masternodes and stacking.
A masternode is still a cryptocurrency full node (computer wallet) that will verify and keep blocks and transactions of the blockchain in real-time, thus supporting and ensuring the integrity of the coin network.
But a masternode is a lot more than a regular node, as its name clearly states it. We have listed below some extra services it can provide:
- Instant transactions
- Direct send
- Increased privacy of transactions through a better anonymization
- Participating right in governance and voting
And here are some of the main cryptocurrencies that work with masternodes:
You can find a more complete list of all the masternodes available and their statistics, by visiting: https://masternodes.online
One of the main advantages of masternodes are their energy consumptions, it is said that they are using 1000 times less energy than standard mining, which makes them a great alternative to mining and in a way the evolution of staking, but with an entry price.
Another benefit is the easier governance system. Indeed, compared to some POW currencies, it is quite simple to take part in the masternodes’ decisions, as you will get one vote for each masternode that you own. It is a great way to have an active role in the blockchain’s development and future.
Find out more about the benefits and risks of masternodes.
Buying and running a masternode
Once you own it, you will automatically be trusted by the network and allowed to verify the transactions.
The more masternodes there is, the safer the network will be, to ensure the security features. And the more masternodes exist, the most stable and safer the system is but also the more the rewards are divided into.
Investing in masternodes
By now you must be wondering if masternodes are a good investment and how does it work?
To thank you for contributing to these extra services and for securing the transactions, you will receive tokens from this cryptocurrency as rewards. It can be a great source of passive income and profitability will depend on the invested cryptocurrency.
We invite you to read our article to learn more about how profitable masternodes can be.
But here is food for thoughts: masternodes are not yet commonly used, as many investors have already their hands full with altcoins investments. Plus they are becoming more and more trendy, as more and more crypto currencies are moving toward this POS system.
So we would say they make a very interesting alternative opportunity, for which you need to consider the risks carefully.