Invest in Masternodes: Generate CryptoCurrency yield / micro payments.

Masternodes

Not only Dash has a masternode (MN) system! A Masternode offers the opportunity of both yield and the potential for capital gains.

There are at least four cryptocurrencies which operate a masternode system: Dash, Crown Coin, Monetary Unit (MUE) and PIVX.

What is the principle behind cryptocurrency masternodes?

Masternodes are computer servers, setup to serve the users of a particular cryptocurrency. In Dash’s case, they enable the InstantSend, PrivateSend, and the Dash Treasury System. Other crypto-currencies such as Crown plan to use master nodes to host decentralised apps amongst other things.

Masternode Yield:

Masternodes generate yield, in crypto-currency. Hosting a Dash masternode generates Dash, a MUE masternode generates MUE. The yield varies primarily according to the masternode count and each coin might have different payout periods. PIVX pays out daily; Crown pays out several times a day.

How to own a masternode?

To create a masternode, a user needs to lock in a specific amount of coin. (See below for more details.) In the case of DASH, the creation of a master node requires to lock in 1,000 DASH in a local wallet. Users can then either setup a server to host the masternode or ask a service provider to do so on their behalf.

Masternodes, the Treasury and Proposals:

In general, cryptocurrency systems with masternodes split the block reward between the miners, the masternode holders and the treasury. (This is not the case with PIVX as it is a PoS, so there is no mining but staking) The block reward comes from transaction fees charged when a cryptocurrency moves from one address to another.

The Treasury is a pool of money which is funded through block rewards. This treasury is used to fund proposals that in some way add value to the currency. These proposals can be submitted by anyone, but some coins ask for a fee to submit a proposal to limit spam. The role of the masternodes is to decide which proposals add real value and which ones do not.

Periodically the master node holders vote for the proposals submitted. If a proposal is voted in, they will automatically be paid. Those proposing have an interest in delivering what they promised, so future proposals get approved. For Dash this process is done at DashCentral.org, the other currencies are still developing their own voting portals.



This system taps into the power, creativity and competitivity of the crowd. People compete with each other to propose the best proposals to improve the underlying cryptocurrency. Their work will improve the value of the currency, which in turn will increase the value of the pot. The higher the value of the treasury fund the more people can be hired through the proposal system.

 




 

The yield from the masternodes depends on:

  • The value of the coin at the time exchanged,
  • Frequency of payouts
  • The cost to host the node
  • The cost of the coins

Which have cryptocurrencies master nodes?

Dash Masternode

  • Coins needed for node: 1,000 Dash
  • ROI: varies between 4.5% and 18.1%
  • Distribution: 45%
  • Payout:
  • More on Dash MNs

Crown Coin Masternode / Tron / Thrones

PIVX Masternode

MUE – Monetary Unit Masternode

Transfer Coin Masternode

  • Coins needed for the node: 10,000 TX
  • ROI:?
  • Earnings of 50% (0.5 TX) of the mining rewards

Excl coin Masternode

  • Coins needed for Node: 5,000
  • ROI:?   
  • Distribution: 10% of stake reward

Helium Masternode & Helium Service Node

Opportunities and Strengths of  investing in cryptocurrency Masternodes

  • Masternodes manage a treasury fund which ensures the long-term viability of a crypto project. This focuses minds on the long term rather than cycles of pump and dump. 
  • The Treasury fund potentially will become more valuable as the coin gains value. For example, as of March 2017 Dash has a budget of $500,000 USD a month. Such a budget is a resource on which the coin can continue to expand its value. 
  • Masternodes owners are a pool of investors with a very high interest in the currencies success. They will spread the gospel of the coin through facebook, twitter and other social media. This skin in the game gives them a lot of incentive to think in the long-term interest of the coin.
  • Masternodes provide the fungibility services that makes the tokens “money” like.
  • Masternodes or Services nodes could also host other services such as decentralised applications for the coin. Crown, for example, has plans to implement a system of profit sharing between decentralised apps hosted on masternodes and app developers. See more on this here: Crown Trons Update 
  • Third party service providers can provide a hands-off solution to owning a master node. This allows even the non-technical investor to become a masternode owner.
  • There are few assets with the properties of masternode: 
    • the collateral fits on a pen drive
    • they generate revenue
    • the capital backing them up has “unlimited” upside potential
    • the owner of the cryptocurrency is the full owner; there is no third party
  • The more masternodes exist, the harder it is to take all of the masternode networks down at once.

Threats and Weaknesses of investing in Masternodes

  • Large coin amounts concentrated in the hands of a few that are used to create many master nodes could pose risks to the coin. This situation could put the master node counts, in jeopardy if, for example, the whales decide to quit the coin and liquidate the collateral backing their masternodes, this concentration has benefits as long as these whales have the coins long-term best interest in mind.
  • Master node service providers and individuals with many masternodes could concentrate nodes in specific data centres and locations. These economies of scale would reduce the cost of hosting, but make the nodes and the cryptocurrency more easily susceptible to physical or electronic attack.
  • Nodes are susceptible to DoS (Denial of Service) attacks, mainly when hosted on cheap and weak hosting accounts.
  • The price of hosting a masternode can be higher that the earnings from the coin. This value will fluctuate 
  • The price of a masternode can increase to such an extent that masternode owner’s capital becomes too concentrated in one asset. Such concentration brings concentrated risk and investors might choose to liquidate the coins backing the masternode in order to diversify them.
  • The legality of a masternode is unclear. They provide a location where mixing take place but are not mixing coin themselves. For regulators, though, MNs could be an easy target. See more here MNs legal aspects.
  • Masternode collateral is substantial, and it is an investment whose value may go up or down. A dash node today 17/03/2018 costs, $86,000. There is no guarantee that the return of capital invested will ever take place. If Dash, for example, loses value and drops to $20. The 1,000 dash used as collateral for the node will be worth $20,000.
  • Masternodes could face specific regulatory challenges because of the services they provide.
  • Masternode revenue is reduced the more masternodes come online.

How to invest in a cryptocurrency masternode?

  1. First, decide on which coin masternode you want to operate. This depends on:
    1. What can an investor afford?
    2. Which Cryptocurrency has the most future potential. See: Beginners guide to analysing Altcoins
    3. The current ROI
    4. The upside or downside potential price of the coin.
  2. Calculate how much Bitcoin is needed to buy the required number of coins as collateral for the masternode
    1. Add some more coins to handle the transfer fees.
    2. The collateral can be either
      1. Bought all at ounce
      2. Staggered or bought slowly over time, to avoid buying at the top.
  3. The investor then needs to decide if the masternode will be hosted by a third party or DIY. 

Mastenode Setup Manuals

Conclusion – Masternodes a good investment?

Masternodes can be a good investment it much depends on the price you bought the capital. The later an investor comes to the masternode game, the more the node would cost. Look at the cost of Dash nodes today. It also makes sense to spread the investment in multiple nodes from different currencies, diversification is nice.

On top of the financial aspect, masternodes are a great governance mechanism for decentralised organisations like cryptocurrencies. Owning own is not only about money, but also gives you a voice in the direction of the coin. It’s not only about money.

Tips welcome … sponsor a pint of good English beer.

MUE: 7P3J5cJbYgV8zFGp2f5p6pedRCgXKd7fBg
PIVX: DKDPyk7oCqKqPzmLDP4JATk8UcjUFR3wwD
Crown: 1DamFkfncBjkxStMcjx8Fq3SNLenaJrrLQ
Excl: EWvYxcUSgrA8qSSMGQoAMq8f9jvyvkV31P
Transfer: TxL9eupngAZBj5btjFGJhmzQsZep8kw4zf
BTC: 17AfSPgw8ZX81w7uD4jqCf6JT5gDEvAf7R
Dash: Xfd62PhbnPtVoZgPo2it5JHRudR7ps732J
ETH: 0x9ADdA4B2D72E631a1Bbd6c6bc38a0924842240e4
LTC: LdNJzQbTvVmr8qLJ1zTBicsCjEcgw6fuNL

If you know of other CryptoCoins which have mechanisms that generate yield, please do let me know:  Contact Form

Any comments and help to improve this document would be greatly appreciated.

AD: Want to learn more about CryptoCurrencies try: Cryptoversity

Thanks for adding your comments below.
Jim Reynolds



  • Anthony Caligiuri

    There is a really good coin with Masternodes called Transfer (TX) the website is tranfercoin.io and their forum is transfercointx.pw. With only 5.8 million coins in circulation and a cost of 10000 TX per node and 1140 coins created each day, its going to be super scarce. The coin is super speedy, and the community is getting back together.

    • Pasportu Kruger

      TX number One

      • Invest It in

        Why?

        • Pasportu Kruger

          Because TX true

          • Индеец

            FAIL. site not exists xDDD morons.
            Shitcoin shitcoin. La la la

  • Pizza Mampf

    Your EXCL specs are outdated. Only 5000 coins are required to start a masternode. Coin was relaunched 2016 as 100% PoS coin. All up-to-date specs/infos you can find at https://bitcointalk.org/?topic=1546005.0 or at the info sheet graphics.
    https://uploads.disquscdn.com/images/8e53a37596e13974aa40367fe2512ca9c7e85f0f8f46ed208cb27514f53578c2.jpg

    • Invest It in

      Thanks info has been updated

  • Mark

    Insane coin just started to use masternodes as well.

  • Amiet Kasi

    Chaincoin is the new Dash now. perfoming well. still very low. so jump in.

    • Amiet Kasi

      only 1000 needed for a masternode

  • Amiet Kasi

    bitcore is under the rader. is free to claim (airdrop) and gives ervery monday 3% interest. one with the best profits

  • Amiet Kasi

    bata is an coin that will start soon masternode. buy you’re coins now cheap.
    10000 for masternode. they call it ubernode.
    price is very low now.

    • Mr Chandu

      how much average node payout for bata?

  • Daniel Calhoun

    Footy Cash (XFT) is now a Masternode coin. The newest version 2.0.1 was released yesterday.
    There was a coinswap the past month but it is over now. Re-launch scheduled in the next upcoming days. Re-listing on CoinMarketCap this week.

    There are only 4.5 Million XFT total.

    XFT is sold on cryptopia.co.nz

    1 masternode costs 5000 XFT

    https://bitcointalk.org/index.php?topic=1374929.0

    https://join.slack.com/t/footycash/shared_invite/MjE5MTU2ODE5MTQyLTE1MDExMTY3NDQtOTAzYjgyNjRkOQ

  • Johnny

    Would be cool if you could add Korecoin to the list. Very promising upcoming privacy focused crypto with integrated tor browser, tor masternodes + the much anticipated korephone. https://bitcointalk.org/index.php?topic=2096416.0

  • Chetan Bhadage

    I just saw on http://www.masternodes.pro about Martex Coin yesterday. There were 26 MNs and the daily income from hosting a MN was around $472. the investment was around $14000. Today i can see that the count of MN has reduced to 24, but the daily earning has risen to a whopping $728.
    Considering that i can afford to invest $14000 today, please suggest and guide whether it is a good idea to invest in Martex Coin MN today when it’s price is still under $3.

  • Shirevest

    XIOS is another one worth checking out. Multiple master nodes can be run from the same server, only 100 coins needed per master node, 21 Million capped supply (just like BTC), super fast, no pre-mine, no ICO, and is privacy centric (will operate on TOR).