How to run a Masternode, Cryptocurrency for Masternode investors
In this article, Bitcoin Vietnam News introduces one of the best ways to make a lot of money in the cryptocurrency market through Masternode investing. But first, what exactly? How does Masternode operate and what do you get by investing in Masternode?
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What are master nodes?
It is important to know that Masternode is a cryptocurrency node or wallet, which is a proof-of-service algorithm that protects copies of the blockchain in real-time. It works like a typical Bitcoin full node, and thanks to DASH (the first digital currency to use it), masternodes are becoming increasingly popular among investors today.
Apart from that, it should also be noted that masternodes have different functions from regular fullnodes. In fact, its function goes beyond just protecting the entire blockchain itself and sending transactions as one whole node. Here are some interesting features on masternode and other nodes.
- Increase transaction security
- Make transactions quickly
- Strengthening the accounting system in the cryptocurrency world
So, masternode is not just an independent wallet, but a wallet that allows other nodes to connect to create a decentralized network; abbreviated M.N.
It should be noted that almost every masternode performs the functions listed above; However, these features may differ from one cryptocurrency to another depending on how the masternode is used. In short, most of the nodes implement this feature in the cryptocurrency world.
How to start a Masternode?
Just like any other node, you can use Masternode efficiently. With masternodes, security measures are taken to ensure the system doesn’t tip over. Security measures are taken to prevent bad people from accidentally infiltrating the system. Users have to deposit multiple units of the same cryptocurrency to run the masternode.
In addition, security measures also guarantee that the owner will not compromise or crash the system, and the best way to do this is to attach security measures to the connection points. This way, the owner will definitely not duplicate the entire masternode system. Even if the system is compromised by the owner or someone else, the masternode will punish by lowering the owner’s HODLing score.
These are also the things needed to run a masternode
- Cryptocurrency of the same type. For example, about 1000 DASH coins are required when using a DASH masternode. Therefore, this value will be different in different cryptocurrencies
- A good VPS or server to host crypto wallet any time
- Great storage for blockchain storage
- Good IP address.
It should be noted that the above requirements are required for all Masternode types.
First of all, the following views and questions may arise: “To meet these conditions, it is necessary to spend a small amount of money at the start, so how to get it? How much profit?” Yes, that may be true, but read on to find out how masternodes make money?
What are the advantages of investing in Masternode?
Masternodes can be very important for cryptocurrency investors because using them gives you more opportunities to earn incentives. In other words, this means you can earn weekly or monthly interest with a masternode.
You should know that this offer varies for each cryptocurrency where Masternode users can earn monthly or weekly.
If your cryptocurrency of choice has a masternode option, your best bet is to explore this monetization feature.
An important point to remember is that if you want to make money running a masternode, you should choose a cryptocurrency to invest in. Before investing, you need to calculate the return on investment and the percentage of profit in order to choose the right cryptocurrency.
Difference between Masternode and POS
If we just look at the revenue Masternode continues to generate, it’s easy to see that Masternode is very similar to POS. But in fact they have many differences.
- Rewards for Masternodes are not fixed like POS, but depend on the ability to run the computer running the Masternode. If this computer is unstable, the masternode may lose the opportunity to get the prize and the prize will be given to another masternode. The reward for POS is to generate blocks, while the reward for Masternode is not to generate blocks but to provide service infrastructure for value-added services. Block generation in Dash is done by POW (Proof of Work) miners.
- Masternode operation is highly secure, meaning that there is no need to open a wallet for computers operating on the network. What does it mean? The POS mechanism requires you to keep your wallet open to keep the machine working. Masternode uses a mechanism called hot wallet and cold wallet. A hot wallet is actually a virtual wallet that doesn’t need funds, it runs on a computer running a masternode that works 24/7 with an internet connection. A cold wallet is a dashboard wallet containing 1000s of dashboards that run on a normal computer, need to connect to the network only while working, and are only used to start a masternode or vote on a project. And when you don’t need these things, users can disconnect them from the computer or turn off the PC.
- POS has a fixed rate algorithm, and masternode rewards depend on factors, besides factors such as stable operation, as mentioned above, rewards are more or less (faster or slower) depending on the number of active masternodes. Usually, Masternode rewards decrease by 7% every year, but Dash’s price also goes up, so it’s fine. However, the reward value is only 45% of the block generation reward value and if there are more masternodes in a certain period (eg 1 month), then the reward for each masternode will be lower. Usually Masternode queues to receive prizes. The more Masternodes, the longer the queue and the longer it takes to get the prize.
- Technically a masternode is not an ordinary node, it provides another important service to the Dash network, which is now PrivateSend, InstantSend and Decentralized Management – i.e. decentralized management. problem. Masternode eventually becomes the platform that allows Dash to have more important services that will be released in the next version of Evolution. You can think of Dash’s masternode network as servers or data centers owned by companies like Amazon, Google, Facebook, etc. This will form the basis for the Tier 3 and Tier 4 networks that Dash will later develop.
- Another major difference is Dash’s unique masternode-based governance. People who invest in masternode have the right to choose important decisions in this ecosystem. Coins using POS without a masternode can only win, not vote. However, income from coins is not guaranteed if the coins fall. Only by choosing to participate in important decisions to support reinvestment to ensure the continuous development of the coin will the income generated be sustainable.
- The final difference is that POS has no stipulations on how much you hold, whereas masternode has a fixed deposit amount and when the price of Dash is as high as it is now, that deposit is also very expensive. But it is a unique mechanism that helps Dash keep its price always lower with lower volatility than other coins.
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