Masternode (MN) is one of the buzzwords within the crypto community. It is a crypto-wallet with a copy of the entire ledger that reflects the real-time state of the network. Masternodes help to keep the system safe and in return are rewarded with cryptocurrency. In other words, by running a masternode, you receive crypto to your wallet (node).
In technical terms, a node is a computer or server connected to the crypto network. This network is distributed, which means that the nodes are spread out across the world. Running the copy of the blockchain helps to ensure the integrity of the network.
How are masternodes different from regular nodes?
In some way, masternodes represent nodes with extended functions. For instance, they don’t only help to maintain the blockchain and process transactions but also retain the privacy and higher speed of transaction processing. In some cases, they also help to govern the network and can be used as votes. What’s more, they’re constantly communicating with each other instantly updating others on the state of blockchain and all transactions on it.
Depending on a specific cryptocurrency, the functions of masternodes can vary. Some masternodes, for example, allow instant and direct transactions apart from their main security features.
Masternodes represent a form of incentivized mining. Anyone with a computer and constant internet connection can run a masternode. The only barrier that the system requires is an investment – an amount of cryptocurrency (stake) that a node needs to have on its wallet to participate. It’s there for security reasons. This stake protects the system from corruption. In an attempt to undermine the system, the masternodes holdings will be devalued. That keeps the system intact and motivates the nodes to abide by the rules of the network.
Each individual cryptocurrency network be it bitcoin or something else has its own incentive system of rewards and amount of minimum stake as an entry barrier. The Dash network, for example, requires locking up a minimum of 10,000 DASH to run a masternode.
Other requirements for running a masternode are sufficient storage to maintain a copy of the blockchain, a verified IP address and a server that will host the wallet 24/7 without interruptions.
How is MN different from PoW and PoS?
The use of masternodes resembles proof-of-stake (PoS) mining, which emerged as a more sustainable alternative to proof-of-work (PoW) mining. Similar to miners in the bitcoin network, masternodes process crypto-transactions within the network securely. With each block, they receive rewards. However, the methods are not identical. Neither PoW nor PoS requires initial investments from the miners. Both PoW and PoS cryptos run masternodes. The most significant benefit of MN mining is that no investment in specialized mining equipment is required.
Not all crypto masternodes are equally profitable. Finding the ones that require research. Many cloud mining service providers determine the profitability of several cryptocurrencies automatically through algorithms. That’s why they are a popular way to earn crypto with masternodes.
MiningFriendly is one of such companies. Its operation is spread across several continents and countries combining the best practices of crypto mining and trading into a profitable and effective evaluation system. This system excludes the coins that don’t perform very well from its portfolio and always gives priority to the mature ones whose price has demonstrated steady growth over time.
Every MN system approaches payouts differently. Some systems distribute rewards several times per day or once daily. MiningFriendly has several plans suitable for short-term investments with daily, weekly, or monthly payouts as well as longer-term plans with annual payouts.
With customers’ investments, the company sets up masternodes for a portfolio of the most profitable cryptocurrencies at that moment. Their evaluation and re-evaluation happen daily. Daily liquidity is very important here because it generates profits that are converted into fiat (USD). And that helps to establish stable and predictable earnings to customers for the various investment plans that MiningFriendly has.
The company doesn’t solely rely on masternodes as its core mining method. It uses all three methods: PoW, PoS, and MN. The combination of these methods grants a lot of flexibility and adaptability to the daily fluctuations within the market.
MiningFriendly’s 4-tier evaluation system always keeps the ‘right’ coins in check, e.g., the PoW cons that can be mined profitably as well as the PoS and MN mined coins. The key factors that determine their profitability are metrics such as ROI, market cap, daily trading volume, and market price as well as behavior. The choice of a particular mining method at any one time is assessed to the ever-changing market situation.
The evaluation system separates the profitable cryptos from the ones that are not. The least profitable coins are eliminated from the 1st tier with the most profitable ones and are put on hold (2nd tier). The 3rd tier includes the upcoming possible “stars” under the radar, analyzing companies/coins and trying to catch while they are small or at the beginning of the growth-phase; while the 4th tier catches the coins that are not profitable. This filtering system, developed by Jürg Richards, the CEO of MiningFriendly who has 30+ years experience in traditional trading, incorporates similarities of the stop-loss order used in trading. Using the principles of trading stocks, bonds, and other commodities, Jürg runs his company following a unique and successful business model to produce stable ROIs.
In addition to MiningFriendly, Dr. Richards is working with a partner on a project dedicated to Masternodes, where customers will be able to book a Masternode in exchange for returns. The process consists of choosing a given service without worrying about the technical difficulties involved. The service will be the first ever to be offered in fiat and paid out in fiat. If you wish to know more about this project, visit their website.