Intro
Do you want to earn profit with crypto but do not like trading or mining? There is another way. Check out our article about masternodes and start making a profit with your favorite coin.
What Is a Masternode?
A masternode is a type of blockchain node that stores the entire blockchain and is responsible for validating and relaying transactions. However, it’s not just this kind of node that contains the whole copy of the blockchain. Most blockchain networks require users to run full nodes, which store the entire blockchain history. This is necessary because it allows them to validate transactions and ensure they are not fraudulent. The main difference between them is in their functionality. Masternodes are only supposed to verify transactions submitted by other nodes.
Masternodes have a crucial feature that differentiates them from regular nodes. Trusted parties run them, and their hosts are rewarded for their services. The reward comes from a portion of the transaction fees paid by users sending transactions.
Incentivizing masternodes through rewards helps improve network security since these nodes provide extra security against attacks on the network. Running a masternode is an alternative to mining that requires fewer resources and higher rewards simultaneously. They are usually expected to run non-stop, which increases the possible reward. Nevertheless, it may be challenging to accumulate a significant amount by running this node.
What Are Masternode Coins?
Masternode coins usually refer to crypto networks that rely on masternodes. Even though masternodes are essential parts of the crypto world, not all cryptocurrencies have them. The very first project which implemented masternodes was Dash. However, new projects appear often. So here are the top 10 masternode coins 2023:
Dash
DASH is based on a modified Proof-of-Stake algorithm. Masternodes are used here to run the network. Even though Dash is a Bitcoin fork, the core systems of the projects are different. The Masternodes chain helps to make the validation process simpler. To start a masternode, a user must stake at least 1,000 DASH. Each masternode has a say in the future development of the project.
Pivx
Masternodes are used to enhance privacy, which is one of the main focuses of the network. Their native token is PIVX. They also have a right to vote for governance decisions.
Firo
FIRO is another privacy-focused coin. Masternodes provide enhanced privacy for users and enable Sigma protocol usage. Decentralization here is guaranteed with more than 4000 masternodes.
Horizen
Horizon expands the masternodes usage from just privacy to added security functions, sidechain functionality, and decentralized communication. The pltaform has a token — ZEN.
Here the primary responsibility of masternodes is to generate and verify sidechain blocks. This example shows that the horizons of masternodes implication can be widened.
SmartCash
SmartCash utilizes masternodes for several purposes, including faster transactions, governance, and decentralized treasury. Their token is SMART.
In addition, masternodes get voting rights. We can see that some of the basic masternode’s functions remain the same from one project to another. But there are a lot of new features that have been added.
Flux
FluxOS is another network run by masternodes. Users that hold nodes for this platform live all around the world. This makes it possible for apps on Flux to be available from any part of the world.
FLUX offers three types of nodes, each with its particular requirements for collaterals and hardware. Thus, depending on the reward percentage, a user may have to stake from 1000 FLUX to 40,000 FLUX.
Divi
This platform differs from previous ones by the way it uses masternodes. Here they help to provide payment solutions, a wallet, and a reliable security system. Thier token is called DIVI.
Masternodes allow this project to fasten transactions and provide additional features, including a lottery and marketplace.
Phore
Apart from faster transactions and a marketplace, Phore utilizes masternodes to provide identity management solutions. They have token — PHR.
Blocknet
Blocknet offers another way to use masternodes. Here they help to provide cross-chain interoperability, one of the main problems of the blockchain world. They also has a token called BLOCK. Masternodes also participate in governance and vote for the future of the project.
Syscoin
With the help of masternodes, Syscoin increases security and speeds up transactions, runs a decentralized marketplace, and offers identity solutions. You can earn some SYS,
How to Get Passive Income With Masternode Coins?
After getting a general understanding of masternodes, the next step is comprehending how masternodes work.
To set up a masternode, several steps are required.
- Choose a project;
- There are a lot of various coins that allow users to run masternodes. All of them have their pros and cons;
- Stake;
- As stated above, it is necessary to stake a particular amount of coins as collateral;
- Set up a Virtual Private Server (VPS);
- Remember that it is unacceptable for a masternode to go offline. Thus, VPS would help you to stay online 24/7.
These are the basic steps that must be done by anyone who would like to run a masternode. To run a self-operated masternode, a user must have a particularly technical background, including blockchain understanding and knowledge of Linux. Moreover, in this case, a person is responsible for main activities, such as setting up and securing the node.
Nevertheless, it means more than just people with special qualifications can run their masternodes. There is another solution. Some platforms are ready to make our lives easier by providing masternode hosting services. It is effortless to use. Just transfer collateral and pay some fee.
Either way, the masternode host will get a reward, which depends on many factors, including the consensus model, the number of masternodes in the network, etc. To ensure that the income will look satisfying, paying attention to a coin’s dynamic is crucial. A long-term increasing trend may bring an excellent income. In general, masternode operators can get 5% - 20% of a delegated block reward.
Bottom Line
Running a masternode has quite a lot of advantages as well as disadvantages. Masternodes change a lot in how the network operates, and they can prevent some malicious schemes that exist at the moment and are allowed by miners. It can also become a source of income if run properly.
On the other hand, some people assume that the masternode system gives too much control to a small group of users, which harms decentralization.
As stated above, masternodes are already used for many functions. It is hard to predict the future of networks that rely on this technology, but it is possible to use it for personal benefit.