Masternode is a relatively new concept, which was introduced as an alternative to trading PoW-based cryptocurrency mining and trading. The idea is to encourage the crypto investors to hold their coins for long term in exchange for interesting rewards.
We all know that the PoW mining industry has its limitations, as it suffers from issues like high energy consumption, increasing demand and competition, and the high cost of network resources limiting the profitability for miners. As the profitability in traditional crypto mining decreases, miners are constantly looking for newer, better ways to make money in the crypto industry.
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What is a Masternode and How is it more beneficial than traditional crypto mining?
Well, for one, Masternodes do not require you to make a huge initial investment in purchasing sophisticated mining hardware, resources, energy supply, etc. in order to start earning a stable income.
Second, using a Masternode for generating an income is much easier than mining cryptocurrencies.
Let’s start with the basics.
What’s a Masternode?
Masternodes are a higher version of nodes (computers) in a blockchain network. These are full nodes or crypto wallets that manage a separate copy of the entire blockchain ledger, which is updated in real-time. The users, in exchange for managing the Masternode, are rewarded with new coins.
Masternodes are different than regular blockchain nodes (mining) in that they perform advanced tasks that are crucial for managing a blockchain or processing the transactions.
How are Masternodes better than Mining and How do they work?
If you are a crypto fanatic and worried about the decreasing profitability of crypto mining, Masternode can be the best option right now for you to make a solid passive income. Here’s why.
While crypto mining is highly dominated by popularity and a huge demand, the Masternodes are still somewhat untouched, i.e. not many people are involved in this activity as of now. Moreover, the rewards are quite huge at this time because of the limited number of users. Also, the coins are affordable, which means staking in Masternodes is much less expensive than setting up a mining rig. And last but not the least, you will be earning regular rewards from your investments rather than simply waiting for the coin price to go higher.
Things to look for when joining a Masternode – ROI
Before you get started with Masternode staking, it is important to understand the crucial terms like Masternode ROI.
ROI or Return on Investment is a term that defines the profits made from a particular project in terms of the ratio of profit to the investment amount.
With Masternodes, however, it is slightly more complicated. The thing is that Masternodes do not give immediate returns, but returns on your investments are spread across a time period of years. There are a number of tools/websites, such as Masternodes.Pro and Masternodes.Online that can help you keep track of your Masternode returns.
An easier way is to simply divide the expected annual profits (number of reward coins) by the minimum investment amount required to create a particular Masternode.
How does it work?
In the end, it all boils down to one thing – how do Masternodes work or how to get started with Masternodes?
Well, if you are wondering the same thing, here you go.
A Masternode can be created by any individual by staking a specific number of coins, depending on the network, in the blockchain. So, yes, there will be an initial investment, but it may be a little or huge, depending on the currency in question.
Here’s the step-by-step process of creating a Masternode from scratch:
Step 1: Download the core digital wallet of the respective coin
Step 2: Register to set up your computer as a Masternode on the server. This will add a new Masternode to the blockchain.
So, you are now all set to run the Masternode server. Now, you can do it yourself or hire someone to do it for you.
Masternodes also manage the reward distribution in the blockchain. The typical rewards assigned to miners for each new block are 40-45% of the total rewards. The amount of rewards one can earn from a particular Masternode is known as that Masternode’s ROI.
Selecting the best Masternode for Maximum ROI
So, by now, you must have realized that the trick to earn the maximum from Masternode investments is to invest in a Masternode that can give you the maximum ROI in return. You can use the ROI calculators mentioned above to find out whether the coin you are considering is ideal in terms of ROI or not.
Now, if you are looking for recommendations or need tips to find out a high ROI Masternode, here are a few things you can try.
Evaluate the project, more importantly, the technical aspects of the project, like how solid the roadmap is, who the team members are, the problem it is trying to solve, technical details, MVP launch, etc.
Second, check if the coin is liquid enough. Liquidity refers to the ability to easily trade or use a coin. So, can you trade the coin you are buying? What is the daily trade volume? Which exchanges are allowing to trade the coin? And so on.
The criteria can, of course, be skipped for the coins that are very new or have no market reputation, but a high enough potential.
While each coin has specific minimum investment criteria for launching a Masternode, the simple math here is – the more you invest, the more rewards you can make from Masternodes.
Now, as for recommendations, there are a number of popular Masternodes you can join. The most common choices include Dash, PIVX, ZCoin, Energi, Cowrium, Swarm, etc.
Cowrium and Energi are two of the newest entries to the Masternodes club, but they are high in potential and future scope. I particularly recommend Cowrium, as the project is backed by a powerful platform, a strong cryptocurrency (Cowrie coin), multidimensional smart contracts and several other advanced solutions designed to ease blockchain adoption for SMEs.
Among other things, the Cowrium Masternode ensures that the digital payments and transactions passing through the network are fast, secure and, most importantly, anonymous. Both the existing and new Cowrie (CWR) coin holders can benefit from the Cowrium Masternode staking system, as they get to earn a fixed number of reward coins on an annual basis, in exchange for their help to maintain the network. The minimum investment criteria for creating a Masternode with Cowrium is 10,000 CWR.