A Complete Beginner’s Guide to Masternodes – Blockchain Reporter


  • Masternodes enable crypto investors to make passive income
  • Different Masternodes offer different payout systems
  • The high entry barrier ensures Masternode operators  will not corrupt the system

Master investor Warren Buffett says, “If you don’t make money while you sleep, you will work until you die.” If you’re going to make earn a passive income in the cryptocurrency space “while you sleep,” you want to learn about Masternodes.

A Masternode is a cryptocurrency full node or computer wallet on a decentralized network that keeps a real-time full copy of the blockchain, and similar to Bitcoin full nodes it’s always up and running.

A Masternode is used to execute functions in ways beyond the ability of ordinary nodes; its features include direct send/instant transactions or private transactions. Other special functions performed by nodes include taking part in governance and voting and enabling budgeting and treasury system in cryptos.

These increased capabilities demand a sizable investment in order to function. The incentive for Masternode operators is a reward system that allows earning percentages of block rewards from the particular cryptocurrency they facilitate.

Masternodes differ depending on the networks they run on with different pros and cons with every system approaching its payout in a different way. Some digital currencies dish out payments a few times daily while others make a single daily payment. The bottom line is that Masternode operators will earn passive income while offering a service to their chosen network without using expensive cryptocurrency mining gear.

Anyone can run a Masternode but the prerequisite for becoming an operator is being able to “lock away” a huge amount of coins and setting up a server through which your holdings will do the rest of the work.

The entry barrier ensures the system doesn’t become malicious; you collateralize or commit certain units of a particular cryptocurrency to operate a Masternode.  The big entry barrier ensures a Masternode owner doesn’t corrupt the system since they have a stake running the entire system and should they attempt to do so, they get punished by the devaluation of their own Holdings.

Masternodes aren’t an extension of Proof-of-Stake coins i.e. cryptocurrencies that are staked and not mined. There are Proof-of-Work projects that use Masternodes so they aren’t exclusive to PoW or PoS.

Operating a Masternode resembles PoS in that by holding your coins your Masternode generates passive income passive income the way stakers earn in a PoS system; however, you don’t necessarily need PoS cryptocurrencies to operate a Masternode.

There isn’t a “one size fits all” answer since it will depend on factors such as the coin you select, how much the coin facilitates Masternodes and how much you coin of choice appreciates in value over time. Some Masternodes will be more profitable than others and some less so. However, every investor can sit pretty when the entire cryptocurrency market grows in unison.

There are several projects that use Masternodes in their networks, though most are largely unknown in the cryptocurrency ecosystem. These include Block (BLOCK), Bata (BTA), Crown (CRW), ChainCoin (CHC), Dash (DASH), Diamond (DMD), GoByte, Innova, ION (ION), Monetary Unit (MUE), Neutron (NTRN), PIVX (PIVX), Vcash (XVC) and XtraBytes (XBY)

What do you need to set up a Masternode?

You will need a minimum amount of the particular crypto you choose to set up a Masternode with the minimum varying from one crypto to another; for DASH MN the minimum is 1000 DASH units.  Next you need a VPS or Server to host you wallet 24/7, a dedicated IP address and enough storage space to save the blockchain. The requirements are the same for all Masternodes.

The greatest incentive for running a Masternode is being able to earn a weekly or monthly interest from your crypto holdings. Different Masternodes offer different incentive models through which an investor can earn a decent weekly or monthly income, translating to a smart passive income.

If you are holding a cryptocurrency that allows operating Masternodes, you want to explore the possibilities of earning a passive income. Take the time to make comparisons of the percentages of yields between coins to calculate the Return on investment before you decide to operate a Masternode. Finally, you want to remember that no matter how good things may look, nothing is guaranteed in life, so ensure you make a calculated risk.



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