What Are MasterNode Crypto Coins: How Do They Work?
In the world of cryptocurrency, most people simply assume that the best way – and perhaps the only way – to make money is by day trading on currency exchanges. However, that’s simply not true. In fact, there are dozens of ways to earn a few bits of the cryptocurrency of your choice; one of the most novel ways is to run a master node.
All right, so here’s some quick and dirty crypto background. Cryptocurrencies are, as you’re well aware, built on blockchain technology. Identical copies of this distributed, decentralized ledger are maintained across the internet by end-users. These copies of the blockchain are called nodes, and they’re important because they provide the backbone of the blockchain network relaying blocks and verifying transactions, but master nodes go one step further by performing specialized, crucial functions.
Depending on the cryptocurrency, these master nodes have a wide variety of key responsibilities. These can include providing increased privacy for transactions and in some cases even providing instantaneous transactions or enable built-in treasury and budgeting systems in blockchains that were designed for these specific functions. Most notably, though, these master nodes participate in the decentralized governance of the blockchain. Master nodes have a vote when it comes to the direction a cryptocurrency can take, and that makes them valuable.
What Are MasterNode Crypto Coins?
Master nodes, like regular blockchain nodes, can be maintained by anyone who wishes to. However, because of the importance these full nodes have, there are some barriers to entry in order to weed out bad actors and those who aren’t taking the responsibilities of running a master node seriously.
This barrier takes the form of a specific amount of cryptocurrency that gets committed or used as collateral or stake. The philosophy behind this design is that individuals with skin in the game in the form of a significant investment will act in the best interest of the cryptocurrency in general. In general, this strategy is sound – master node operators take care to ensure their own holdings aren’t devalued by their own actions.
In addition to the requirement that a certain amount of cryptocurrency be held by the node operator – the exact amount depending on the currency – there are some other things that a master node operator needs to possess. Most important is a physical server or a virtual one to host the crypto wallet with as much uptime as possible – 24/7 preferably. In order to accomplish that, you’ll need a dedicated IP address and, of course, enough storage space to ensure the blockchain in its entirety exists on your server.
How You Can Earn With A MasterNode
Master nodes can and do reward their operators. In fact, while each specific cryptocurrency usually has a specific incentive model that’s unique, it’s a general rule that master nodes earn their owners a set amount of additional cryptocurrency on a monthly or weekly basis – not unlike a bank account that provides you in
These incentivization programs are, of course, just another facet of the way cryptocurrency blockchains motivate users to participate in the network. Knowing full well that asking users to support a blockchain out of the goodness of their heart is a recipe for disaster, monetizing master node operation is a solid strategy to keep individuals invested in a cryptocurrency and its blockchain.
Is MasterNode Operation For You?
It’s important to note that, if you are a crypto investor, master node operation may not necessarily be the right choice for you. As the incentivization and investment rates differ for each specific cryptocurrency, the ROI that you as an investor can access fluctuates my a wide margin.
In the end, however, master node operation offers a lower-risk, longer-term alternative to day trading on a cryptocurrency exchange. Dependent on the cryptocurrency you’re investing in, operating and maintaining your own master node may provide a useful route to diversifying your cryptocurrency investments.