Mining was super profitable at the beginning of the era of cryptocurrencies. An ordinary processor was enough for BTC mining, and as many as 50 coins were given for a solved block. Nowadays, the main cryptocurrency can be mined only with the help of expensive ASIC devices. The entry threshold has increased, and this niche is no longer so attractive. Masternodes are an alternative to this solution. Coin owners can make good money on a masternode, however, this way of generating income is not possible for everyone.
What Is a Masternode in Crypto?
What is a masternode in cryptocurrency? These are the nodes in the cryptocurrency network that are responsible for verifying and approving transactions. Also, the list of responsibilities includes increasing the speed of work and the safety of users.
Masternodes are servers or computers with a static IP address. The prerequisites for work include a running wallet, full synchronization with the blockchain and round-the-clock activity. The idea of creation belongs to Evan Duffield, the creator of the Darkcoin (Dash) cryptocurrency. Subsequently, cryptocurrency masternodes were used by developers of other projects.
Differences between Masternode vs Mining
Unlike mining, masternodes do not require investment in expensive hardware. In addition, compared to mining equipment, they almost do not consume electricity and do not interfere with the sleep of sensitive neighbors.
In addition to these requirements, in order to start, you need a collateral in the network’s cryptocurrency. If you are running Dash, you need Dash coins etc.
For Proof-of-Work mining, there have been special calculators for a long time that know about the complexity of the network, the current rate of the cryptocurrency and can process the entered information on power rates and other things that affect the return on investment.
The same is true for calculating mining profitability using masternodes. Such a masternode calculator does not require you to prescribe tariffs. All information that it provides is in the public domain.
The Benefits of a Masternode
Speaking about the advantages of earning cryptocurrency on a masternode, it should be noted that:
- There is a complete absence of noise in the apartment if you use a hosting provider.
- Setting up the main node is done once and then you only get profit. And in the case of using one of the masternode services, your participation in the launch is generally not required.
- A masternode is updated without restarting the server and transferring money.
- You do not pay to own a master node in crypto, but freeze coins in your account and get a reward.
At first glance, everything looks good, but there are also negative aspects such as:
- Large amounts of investment are required for running a masternode on many blockchain networks.
- Hazard chance of losing your savings invested in a scam project.
- High risk of a hacker attack on a local wallet.
- Long payback period.
What to Look for in a Masternode Coin?
Before investing money in masternodes, there are a few important things to pay attention to:
- Price stability. Be sure to analyze the behavior of the coin’s value over the past few months.
- Developers. Study the team members and their past achievements. It is desirable that the developers have already had some worthwhile product behind them.
- ROI. The ROI is always changing. It is desirable that the percentage should not be too small.
- Liquidity. Just to have an interest in the coin is not enough, as you also need to take care of the opportunity to sell it without unnecessary difficulties.
- Wallets. Explore which apps are recommended by the developers to use. Test them in a virtual machine if possible.
Investing and Income from Masternodes
Not all ecosystems where you can run a masternode deserve the attention of investors. Half, or even more, cryptocurrencies on the pro-blockchain list are classified as “junk”, which are not used in the financial system. The ROI index does not mean that the money invested will pay off quickly. Profit from a masternode directly depends on the number of transactions, which means that the coin should not have problems with liquidity on trading platforms. Before investing money, you need to scrupulously study the White Paper of the project and get acquainted with information about this ecosystem on popular resources such as Bitcointalk. Look at the Coinmarketcap coin rating and then decide whether to invest in a budget masternode of a little-known cryptocurrency.
The payback of a masternode cannot be accurately predicted, cryptocurrencies are volatile and a sharp change in the market value of a coin can both make the holder rich and bankrupt, depending on which side the scales swing. It all depends on the success of a project and the market situation. You invest at your own risk.
What Are The Best Masternode Coins To Invest In 2021?
Masternodes of various cryptocurrencies differ in many ways.
The masternode coins list is rather extended, but there are those ones which stand out from the rest. There are at least ten such projects in the list of masternode coins.
It is the first cryptocurrency to find mass use which gave the world the concept of master node crypto. It still occupies the first lines in the ranking masternodes lists.
The entry threshold has grown significantly, and 1,000 DASH is becoming more expensive in price, reaching $ 300 thousand and higher by 2021. The interest of investors is maintained by the management of the development team, which in 2019 was able to resolve the problems with inflation, when the effective annual return turned out to be -1%. Over the next 5 years, it is planned to develop deflation up to 7-8%, in order to increase the profitability of masternodes. Average annual ROI is 6-7%.
The transition to Proof-of-Stake will be completed in 2021-2022, and from the very beginning, users can participate in PoS validation. To do this, you can contact the staking pool, or start your own masternode (which brings more income). In the first case, the balance does not matter, even 0.1 ETH can be placed. The second option requires 32 ETH.
The percentage of the reward will decrease if the number of deposits increases. This, in turn, will reduce the amount of ETH in circulation.
1 million of placed ETH coins brings 18.10% per annum, and 100 million equals 1.81%. At the same time, inflation reaches 2% with an excess of coins in staking, and decreases to 0.17% with a shortage.
It is a fork of the well-known Telegram Open Network. Its development required $ 200 billion. Now it is run exclusively by the community, following Pavel Durov’s rejection of the project in connection with SEC claims.
The distribution of tokens between participants takes place mostly on a competitive basis. Anyone can contribute to code, design or advertising and receive TON Crystals. Of course, the system is validated using the BFT PoS consensus algorithm, and having a server, you can launch a masternode, receiving income.
Like Ethereum, ROI is floating and depends on the total volume of the steak (from tens to units of% per year).
PIVX is another project among the coins with masternodes that claims to be a global currency being in the list of the best masternodes coins. The creators state that their PIV token is able to provide faster and more secure transactions than other virtual money. The PIV emission is 55 million coins, and more than 20 million of them are used exclusively for staking and masternodes, so that only about 30 coins tickets are in free circulation.
The profitability of the PIVX masternode is estimated at 5.74% per annum. Of course, the amount is not the most impressive, but if you believe the promises of the project creators, it should not bother you much. If everything goes according to plan, the cost of the certificate will increase.
Blocknet has earned the nickname “Internet of Blockchains” due to its unique peer-to-peer consensus protocol that allows data to be transferred from different decentralized networks and to transfer cryptocurrency from different blockchains. The Blocknet network also runs cross-chain decentralized applications. The BLOCK blockchain operates on a proof of stake consensus protocol, so it uses masternodes.
To run the masternode you will need 5,000 BLOCK tokens. The annual profitability of stacking in the Blocknet network is estimated at 7-13%, and 70% of the reward is received by masternodes. Thus, you can expect an income of 5-9% per annum.
Stakenet is the new name of the PoSW project, which switched to a new smart contract on May 1, 2018. Like Blocknet, Stakenet is working to create a decentralized exchange. The goal of the project is to create a decentralized profit-oriented digital economy that will make virtual currencies safer and more accessible for ordinary users. Stakenet is based on its own blockchain using Proof-of-Stake consensus protocol. Master nodes are responsible for providing high-end services within the ecosystem; represent a large network of computers with a high level of computing power.
The minimum stacking threshold in the Stakenet system is 15,000 XSN. The Stakenet masternode has a very impressive yield – up to 44%.
SmartCash is a project aimed at creating a viable, fast, merchant-focused, user-friendly and community-driven cryptocurrency with a decentralized governance system. In its characteristics, this currency is similar to Dash, as it seeks mass introduction as a fast and confidential means of payment.
Now SmartCash is taking another step forward by increasing its transfer speed and anonymity with Level 2 network nodes or masternodes called SmartNode, which are among the cheapest masternodes and are supposed to provide virtually instant and completely anonymous transactions.
Requirements for creating a SmartNode:
- 10,000 SMART / per node as collateral,
- 20 GB of a hard disk memory,
- 1 GB RAM,
- Dedicated (static) IPV4 address (not IPV6).
SmartNode receives 10% of the processing fee + SmartRewards.
Phore Blockchain is a branch or fork of the PIVX project (which is a Dash fork).
The Phore blockchain uses masternode technology, which provides the following services:
- Transaction verification and processing;
- Private or anonymous transaction processing following ZeroCoin (zPHR) protocol;
- Organization of the Phore budget management and distribution process.
Some additional services that will serve the masternodes may be added in the future, as the Phore blockchain is actively expanding its features.
There is no hard limit on the number of masternodes. The amount is regulated naturally in the free market due to the balance of supply and demand.
Previously Zcoin, today it is renamed Firo. It closes the top 10 cryptocurrencies to launch masternodes. Having a daily trading volume of several million US dollars will allow you to be more confident in the prospects of income in USD.
The yield is at 10% per year and the minimum amount of hold is 1,000 FIO. The network serves 4,000 nodes, so there is life in the ecosystem. The price of this masternode coin is quite stable. A large team and ambassadors around the world attract users.
FIRO’s goal is to become a reliable network for those who prefer free and decentralized finance. The involvement of masternodes really helps the process: transactions gain more privacy, and PoS guarantees speed.
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Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.