What is MasterNode ?

The concept of masternode began to gain popularity thanks to the Dash cryptocurrency. Masternode owners or operators receive financial rewards for running this node. At the same time, masternode owners need to provide a financial contribution from their very own. More details to follow.

DASH is a popular privacy-centric altcoin. DASH uses a proof-of-work system comparable to the one found in bitcoin. Besides, that's only part of the ecosystem that enables users to earn money. Not everybody is capable to contribute to the network as a miner, that is the reason masternodes were introduced. Look at a masternode like a particular server that's maintained all the time. Masternodes are trustless and decentralized, comparable to how bitcoin full nodes operate. Its a second tier that helps provide critical services over blockchain network.


All masternodes propagate using protocol extensions, Masternode announce message and Masternode ping message. These two messages define how Masternodes are deemed to be active on the network. Using proof-of-service protocols or features, masternodes are determined to be online and responding.

There's the main distinction though. Dash masternodes also look after anonymization component of the Darksend protocol. Users may choose to send transactions anonymously by using this feature straight from their Dash wallet. Each masternode on the network provides this anonymization service. This ensures that there is no centralized party to attack or take down. Furthermore, masternodes ensure all transactions are validated in near real time, which makes them quite efficient.

Unlike bitcoin nodes, however, owners of a Dash machine will get a monetary compensation for providing these invaluable services. Individual olives in the network have a possibility to be selected as a recipient of a part of every mined block's value. As more time advances, masternodes will earn the same share per cube reward - 45% - yet it may take more time for investors to see an ROI.

In order to become masternode, one needs to send minimum 1000 DASH coins to a specific address to activate masternode. This system works as proof-of-stake and one of the methods that prove to be deterrent for 51% kind of attacks or to control more than 50% of the network. It is a huge investment to attack the network by becoming one of the masternodes. As of writing this article, the price of DASH was US$426.54 which leads to US$4265 to activate a masternode on DASH network. Moving the funds out from the wallet will remove the mascot on the network. In addition, the wallet address will not be eligible for rewards either. With the rewards flowing in every week, there's a lot of passive income to be generated by running a masternode.

All things considered, utilizing a masternode is an excellent system to speed-up the overall network and provide additional services such as Darksend,  PrivateSend, and InstantSend.

There are many coins or blockchain networks borrowed the idea of Masternode on their blockchain network.
Here is a list of cryptos using masternodes:
https://masternodes.online/
https://masternodes.pro/

For more curious minds, read DASH whitepaper for masternode specifics.
Here is another link to set up your own masternodes ( we haven't tried it )