What are Master Nodes? | Definition and Explanation

A masternode is one of the many ways to earn money in the crypto and blockchain world. The prospect of a solid passive income sounds tempting. But is it really that easy to get rich and what do the Blockchain operators get out of it?

  1. Masternode Definition – a short journey through the Blockchain world
  2. The ordeal of choice – Detect fraud, minimize risks
  3. projects using master nodes
  4. What is necessary to operate a masternode?
  5. Where do I get a VPS for a masternode? Check tested masternode virtual server hosting options.

Masternode Definition – a short journey through the Blockchain world

First and foremost, a master node, like any other node, is a server within a decentralized network. Nodes are important because they can process transactions and store the block chain. However, a master node is capable of performing tasks that a normal node cannot:

Which tasks and voting rights a masternode has can be very different and depends on the respective platform.

Many are wrongly convinced that masternode is an exclusive proof of stake phenomenon. This is because a higher investment in the crypto currency is necessary for these special nodes and the operators have to own and hold a certain amount of coins. But proof of work systems can also use master nodes.

Master nodes are supposed to provide more security and scalability for the network through the additional functions. In addition, the high investment limit prevents monopolization and centralization, such as pool mining. The operators of master nodes receive regular rewards for the additional tasks they perform for the network. Quantity and frequency vary greatly and depend on the chosen platform. The best known and first blockchain platform to introduce MasterNodes was Dash. Many have tried to copy the success of Dash and its master nodes, so today there are many platforms that rely on these particular nodes.

The ordeal of choice – Detect fraud meshes, minimize risks

In order to operate a masternode, users often have to make a larger investment. Fraudsters are taking advantage of this fact more and more often. As News.Bitcoin and some other platforms explained again a few days ago, most projects with master nodes are currently Scamcoins. Therefore prospective customers should research well in advance and consider the following points, before they decide to operate a Masternode:

  • How high is the ROI (Return of Investment)? Even if a high ROI sounds tempting, too high percentages are not feasible in the long run. A solid figure should be between 5% and 25%.
  • Does the project fulfil a purpose? A crypto currency should always have a task or a goal. If it does not exist or cannot be clearly formulated, it is very likely that it will be lost.
  • Is there a solid whitepaper? A whitepaper is the application folder of the crypto project. Some people do without it and prefer to concentrate on the work itself. This may be true for a few, but for most it’s more likely that there’s no concept behind it.
  • If a whitepaper is available, it should be as error-free as possible and the content easily comprehensible.ho are those responsible? Interested parties should inform themselves about who is behind the respective project and what references these persons have.
  • Did they also participate in other projects and how successful were they? Even if the team only introduces itself with pseudonyms, it is better than not having any information at all.
  • Is there a website? If the company only advertises through forums and word of mouth, it could most likely be a fast scam.
  • Is there a GitHub site? Github is a website that hosts the public code repositories for projects and should contain details of ongoing code releases and changes.Presence, social media and communication. How quickly does the team respond to incoming requests? How active are they on social networks? If a project has no new developments to report over an extended period of time, it is usually not a good sign.Course development. If the course rises drastically for no apparent reason,