Masternodes are something that has been around for several years but has only recently started to garner any attention. Also known as Bonded Validator Systems, Masternodes are serves that provide extra services to the blockchain that cannot be achieved by using Proof-of-Work.
Masternodes were first used on the cryptocurrency, Dash. It named the new tier of Masternodes its Proof-of-Service algorithm. This second tier exists along with the primary tier to create a distributed consensus of the Dash blockchain.
Although Dash may have been the first to use Masternodes, other cryptocurrencies have since adopted the model, and there are currently hundreds of currencies that now use Masternodes.
The original purpose of the Masternode was for instant anonymous transactions; however, they are currently used for much more.
There are similarities between Masternodes and the proof-of-stake consensus in so far as they need a stake of a certain amount of currency. This is because networks need holders of Masternodes to have a significant amount of currency before they can use a Masternode.
For Dash, you would need to have 1,000 Dash before you could establish a Masternode.
To use a Masternode, you would download the core wallet of the currency. Conventionally, this needs to be done on a computer that runs 24/7, and the wallet will need to remain open. Once you have your wallet running with at least 1,000 Dash, the wallet will integrate itself as a Masternode on the network, and you’ll start to generate a passive income.
With the Flits Wallet app, you can run your Masternode from your mobile device wherever you are. This is the safest and easiest way of running Masternodes.
The Masternode on the Dash network will help to support features such as instant or anonymous payments. It also makes the decentralized governance possible that allows node operators to vote on important changes in the blockchain.
For just running the Masternode, owners will earn 45% of the block rewards recovered by miners. An equal 45% will go to the miners, and then 10% will go into a fund for network improvements.
Minimum currency holdings are just one of the requirements that you need to run a Masternode. Every currency has its own requirements. The following will be required:
Using Flits Wallet app, you can host your Masternode from anywhere. This will save on a considerable amount of resources.
Masternodes protect the network from attacks in much the same that a proof-of-stake does. It is expensive to acquire enough currency for a Masternode. This helps to keep the network more decentralized as there wouldn’t be many people who would be able to afford to create a node monopoly.
Masternodes have a big incentive to maintain their own Masternode if they want their investment to pay.
There are many potential applications for Masternodes. Allowing blockchains that utilize proof-of-work as a consensus mechanism that adds extra features would not be possible without Masternodes. They work as a sort of hybrid between proof-of-work and proof-of-stake.
One of the benefits that Masternodes bring to proof-of-work blockchains is the lack of centralization, that and the fact it consumes far less energy than a proof-of-work system would.
Masternodes can even stop miners from carrying out any malicious actions. In the Dash system, for example, the second tier Masternodes can monitor the first-tier network of miners. This would mean that if a miner were to try and manipulate block rewards, then a Masternode could reject these blocks.
Masternodes encourage network stability and loyalty. This happens because of the high costs involved in taking on the role of Masternode. Unlike with traditional crypto minding, it is less likely that users will switch to a different coin due to the amount that they have invested in the success of the network.
If you are looking for a real investment opportunity, hosting Masternodes is a great way of generating a fast and secure passive income. Using the Flits Wallet app, you can do this without the need for expensive servers. You can take your Masternodes with you wherever you go.
Download the app today to discover how easy it is to run a Masternode from your device.