Masternode Coin Scams: They Are Rising & How To Use Watchdog Tactics To Spot Them
There are some cryptocurrencies that have a different way to verify transactions and help to secure the network. These are the coins that allow users to run a masternode. For those investors who decided to acquire a masternode, it is possible to earn an important income every single month. But the reality is that most coins with these characteristics ended up being a scam.
One of the first cryptocurrencies that implemented this methodology was Dash, when it was traded under $1 dollar. If you held 1,000 Dash, then you became a masternode and were in charge of protecting the network.
Indeed, the system was very successful because in addition to govern the network, individuals were able to earn an important amount of money. Currently, each Dash token is being exchanged for $332 dollars requiring $332,000 dollars today so as to acquire a masternode.
Other virtual currencies decided to copy this scheme that was able to make Dash’s early adopters millionaire. But different virtual currencies were not able to offer a real utility to the world. Most of them have been helping earlier stakers to become rich without providing any other service to the crypto community.
It is also important to mention that these cryptocurrencies do not work like the Bitconnect scam. They do not seem to be pyramid schemes or similar scams. But it is clear that when they start to rise in value in a bull market, they are very profitable. When they enter a bull market, they get found out.
Investing in these cryptocurrencies may be a risky business, because the volatility in the market may erase the profits they have made in a very easy way. If an important number of node operators decide to sell their tokens that were staking, then the market tends to crash. Moreover, groups of individuals that run masternodes may be in constant contact, almost being able to dominate the market.
Masternodes are a very interesting proposal that many virtual currencies in the market have implemented. The network is protected and it allows users to earn some income for staking this coins. But it is also important for developers to create a blockchain that is used for a wide variety of things. Before adding a masternode it would be important to start working on some usable networks and projects.