What is a Masternode
One of the best ways to quit working and make money is passive income. One of the best ways to make money in 2018 is investing in cryptocurrencies.
So what is one of the best ways to make money in 2018? Own a masternode in a cryptocurrency. Now I know you’re telling me that you do not know what a masternode is but that is what we are here for.
We are going to explain to you what a masternode is, what masternodes to invest in, how to set them up, and give you all the guidance you need to make this year an amazing year of investing for you.
Masternodes are a sequence of servers that support a blockchains’ network. Simple as that!
Now these masternodes do several things inside a network. They facilitate unique services that the miners under proof of work cannot accomplish.
- Handling instant transactions
- Making transactions private or hidden
- Helping in governing and voting inside the cryptocurrency
Those are just a few of the unique services that masternodes do. These can vary from cryptocurrency to cryptocurrency but generally they deal with instant transaction and privacy. Owning a masternode sometimes grants you voting rights inside the cryptocurrency.
Ok now that might not explain what a masternode is in detail enough for you.
Let me start by explaining where the idea of masternodes came from.
DASH!
We can all thank Dash for Masternodes. Thank you Dash!
Dash is the first cryptocurrency to use the masternode system. Dash used to be known as Darkcoin and XCoin.
Now Dash is an open source peer-to-peer cryptocurrency that offer many features including:
- Instant Transactions (InstantSend)
- Private Transactions (PrivateSend)
- Self-governing and self-funding
Wait that’s exactly what you said above right? Yes it is. Most masternode cryptocurrencies have the same features.
Now these features inside Dash enable the Dash network to pay individuals and businesses to perform work that adds value to the Dash network.
Bitcoin instant and private also right?
Not really.
Bitcoin uses a single-tier network where miners perform all the jobs for the network.
Dash uses a two-tier network. Many of its functions are still handled by miners such as creating new blocks but the functions of instant transactions, private transactions, and the governance functions are done by the masternodes.
These functions are so vital to a network that the block reward is actually split between miners and masternodes. Usually the breakdown is something like this but can vary from masternode to masternode.
- Budget and Treasury system gets 10%
- Miner gets 45%
- Masternode gets 45%
- Masternode usually also gets a vote that is used on budget proposals and important decisions that control the cryptocurrencies future.
Well that makes sense but why do I want a masternode?
Because it makes you passive income.
If you believe in the future of the cryptocurrency why not own a masternode?
To own a masternode you need to put up a certain amount of collateral. In the case of Dash you need 1000 Dash coins.
Each cryptocurrency is different. Might be 500 might be 10,000,000.
Why in the world do I need to own so many to make a masternode?
Well having an owner put up that much collateral creates a barrier to entry to ensure that the system does not get malicious. It also ensures that a masternode owner has incentive to hold onto the masternode and makes it so the owner is less likely to cheat or corrupt the system as the owner has a very high vested interest into the cryptocurrency.
Ok so I found a cryptocurrency I like and that have masternodes. What now?
HOLD UP
Lets double check the cryptocurrency that you’re interested in and make sure it is a good choice. Unfortunately not all of them are honest and moral companies. Some are just looking to pump their coin and then dump their holdings and some are just terrible.
Let’s check the following things.
- Does it have a social media presence? Slack Chat, Telegram, Discord, Reddit, Twitter, etc? Is there a following?
- Who are the developers? Do they have previous experience in this field? Do they have a Linkedin profile? Do they have advisors?
- What is the purpose of the coin? Is the purpose of the coin to have masternodes only?
- Is there a demand for the coin? What is the purpose of it?
- How do the other masternode owners feel right now?
- What are the rewards for having a masternode? What is the ROI?
- Are the block rewards going to change in the future?
- Can the coin be used for products or services outside its own network?
Now that’s a lot to look into and fortunately for you we will try and do most of that research for you.
I double checked the cryptocurrency and it seems like a good investment. I also collected all the coins needed to start a masternode. What now?
Well in order to have a masternode there are a few more things that need to be done. Masternodes are required to be connected to the network and marked as a masternode.
How do you do that?
Well it is going to be different for each cryptocurrency but don’t worry we will help you through that too.
One thing that almost all masternodes require is a server. A server is basically a computer that is connected to the network and provides services to the cryptocurrency.
This can be setup on a home computer that will have to remain online 24/7. You will also need a dedicated IP address and storage space to hold the complete blockchain. We also recommend no less than 2 GB of ram.
Wait, I have to leave my computer online 24/7! What if the power goes out or my internet goes down?
If you are disconnected from the network you will be dropped as a masternode. Now you will be able to reconnect eventually but you will lose your passive income in the meantime.
So what is the solution?
For most people the solution is a VPS or a virtual private server. You can pay a 3rd party company to host a server for you. These remain online at all times and do all the work for your. These are pretty cheap services too.
Don’t worry we will review some VPS service for you also.
Ok, I got a VPS setup, have the coins, and followed the instructions on how to setup the masternode. Now what?
Sit back and enjoy the passive income!
Now the return on investment from a masternode can range between 0% and 1000% in a year. This number varies greatly on a lot of factors.
- The price in which you bought your coins
- Block reward or the incentive that the masternode offers
- The cost to host the masternode
- Final price of the coin when you sell the masternode
- Taxes you pay
- And many other factors
THIS SOUNDS GREAT!
It is great! With the cryptocurrency market expected to continue to rise in 2018 you will not only see profits in the coins value that you hold but will also gain passive income from holding the masternode.
You can even spend the passive income to buy another masternode!
Masternodes are a great way to make passive income. With the rapidly growing cryptocurrency market the value of your masternode will increase as demand increases and the rewards from holding the masternode is just icing on the cake. Do your research and invest wisely.