The emergence of master nodes in cryptocurrency started with Dash. The best time to know if it is worth checking out is now! Especially with over 490 blockchain programs already utilising the package. Let us understand the major differences between Master Nodes and Crypto Mining.
There are two major methods of acquiring cryptocurrencies — mining and trading. Mining involves the use of sophisticated machines for the simplification of complex mathematical tasks. Tokens (crypto) are rewarded at the end of each task. Trading, on the other hand, involves taking a calculated risk on the price movement of cryptos before buying or selling.
What are Master Nodes?
A master node is a wallet on a decentralised (blockchain) network capable of confirming or rejecting instant or private transactions, and direct transfer needed to complete each block.
Every master node owner should earn a percentage of income after completing a block. Reward distribution may vary between the miner and the master node owner and depending on the reward for a block.
Factors to consider with Master Nodes in Cryptocurrency:
- Synchronize with the master node network
- Your wallet must be online at all times. It must also contain the standard amount of token required by the community. For example, the Dash community requires you to have a minimum of 1000 Dash in your wallet.
- Account owners may enjoy a node per day, even more, depending on their choice of coin.
- No two master nodes are completely identical because each network interacts with its master node differently.
- Lastly and most importantly, never stop making research and maintain a high level of awareness.
The Master Node is not tied to only Proof of Stake (POS)
Masternodes and Proof of Stake are mutually exclusive. None necessarily needs the other to function effectively. Both POS and POW (Power of Work) can use the master node. Although there is a limit to the amount of coin you can acquire with master nodes, it remains a better option because of its predictability.
You can earn passive income via a master node the same way you can through a POS cryptocurrency. They are a great option for crypto casinos.
What about Crypto Mining?
Unlike trading (in master nodes), mining is the pathway to acquiring a new token. The crypto generated are used for trading (master node owners)
The mechanism suitable for mining is the POW (Proof of Work). Hence, another name for POW members is miners.
Interested in crypto mining? Here are a few things to consider:
- Prepare your mind for a degree of sophistication. Especially in terms of graphic processor GPU and ASIC chips.
- The possibility of mining other cryptos.
- Access to constant and reliable internet.
- Cooling system for your machine.
- Prospect of the coin you wish to mine and the current state of its community.
Mining vs Master Node:
To understand the difference between both concepts, let us take a look at the pros and cons:
Pros of CPU/GPU Crypto Mining
- Specialised hardware is not required always for mining. Crypto coins can be mined over a mobile device too.
- Too much technical knowledge not required
Cons of Mining
- Mining is time demanding
- Setting up a mining network or system is expensive.
- Running maintenance and upgrade is no piece of cake (financially) as well.
Pros of Master Nodes
- Requires less sophisticated hardware.
- Allows for better privacy and incognito mode before, during, and after a transaction.
- Direct sending is possible.
- The rate at which block generation occurs is very fast.
- X11 hashing algorithm provides the needed level of security.
- Master node networks are not as time-consuming as mining procedures.
- Improves the efficiency of the Blockchain network
Cons of Master Nodes
- Master node wallet must be integrated with blockchain always. This is because going offline for a split second attracts a penalty.
- Setting up a master node encompasses a series of complex processes.
Popular cryptocurrency running on master nodes include:
1. Dash: boasts of fast and private payment, a minimum of 6.95% of annual return. Like I said earlier, every member needs at least 1000 Dash to be able to stake. The cost to stake in fiat is $149,440.
2. Colossus: boasts of private payment and an annual return of 20.46%. You need a minimum of 10,000,000 to be eligible to stake. The cost to stake in fiat is $6090.
3. Dynamic: eligibility for staking starts from 1000 and 23.47% is guaranteed. The cost to stake in fiat is $1,160.
Other cryptos to watch out for include KZCash (KZC), Nibex Cash (NBX), EXUS Coin, just to name a few.
Both miners and master node owners are major entities in the blockchain community. Their efforts, put together forms the financial pillar of blockchain. Concerning which is the best option to go for, factors such as your environment, objectives (crypto casino or gambling), and what you can handle at the moment are things to also consider. If it is of any help, I am a master node fan.