Summarizing what was said in the last article, Masternodes are meant to be servers that embody a component of a large network. They are constantly connected to the Internet and consequently to the Blockchain. They have unique functions that make them different from ordinary nodes. They include numerous features including instant transactions, private transactions and direct sending. We can also say that they are a wallet on which a minimum required number of coins are deposited.
What is their purpose? One of the main functions is the confirmation of transactions within the network. Due to the permanent online connection, they are in constant exchange with other nodes in the same network and thus synchronize the blockchain. Master nodes are often also responsible for the execution of anonymous and direct transactions. They therefore also provide the necessary data security, which is a hallmark of cryptocurrencies. A Masternode also allows participation in voting on blockchain-related topics. What is their usefulness for a cryptocurrency investor? Once the masternode application is ready and installed, just like staking, you have to commit a certain amount of tokens specified in the protocols.
Different cryptocurrencies have different incentive models through which a trader can earn monthly or weekly. If you have invested in a cryptocurrency that allows you to make a masternode, you should definitely explore this earning option.
At the moment there are plenty of coins on the market that allow you to create a masternode, but not all of them are profitable due to the few incentives they give. In order for this to work, you need to meet a few requirements: the first one is asking for a fixed amount of coins that the user has to deposit into the currency. By asking the user for this amount, a certain barrier is created that prevents unwanted phenomena. That is to ensure that those in control do not corrupt the system and the best way to counter them is by putting this block where the node operator has invented something in the currency.
The main benefit of the masternode beyond just staking is verifying transactions on the blockchain, and he gets paid for that contribution. This means that the payoff is more consistent, which definitely appeals to many people. In addition, Masternodes have a set of extended functionality in the blockchain that is associated with more effort so that additional remuneration is guaranteed. With Bitcoin, the origin of all cryptocurrencies, there is no remuneration for Masternode operation. That is why only other crypto currencies are attractive from the perspective of passive income through Masternodes. In conclusion all masternodes require more money and more hardware and setup than simple staking, so it is an activity suitable for determined people who have the technical knowledge. As with all things regarding the crypto world it is always advisable to do research before jumping in headfirst.