Header Ads

Guide for Investing in Masternode Coins

Masternode investment tips
  • So what's a masternode? 
  • How is it different from staking or mining? 
  • Why are they one of the best investment opportunities of this century? 
  • And how do you get one? 

I will answer all of these questions in this article, but before we talk about masternodes, let me give you a crash course on regular nodes and the blockchain in general. Remember that one of the best parts of the blockchain is that it's made up of tons of computers all over the world. What's special about how blockchains work, is that every single one of those computers has the same exact record of a shared database.

So everything that's ever happened on the database is in what is known as blocks that store the records. We call this shared database, the blockchain. So if you want to add to the blockchain, the next block on the chain, you need to convince every single computer on the network that you've got a valid transaction. You can't edit previous data, you can only add to the blockchain. And that's called being immutable and append-only, this is what makes the blockchain so special. Immutable shared data is pretty rare and special when it comes to technology. And that's what gives cryptocurrencies such as Bitcoin, the mantle of being the first piece of digital property that has scarcity.

The process of getting all those computers or what I'm now going to refer to as nodes to agree on what should be added next, I mean, what should be appended to the end of the blockchain is called consensus. What method of consensus those nodes use is dependent on the coin they're helping to secure. Or in other words, the nodes are what make the blockchain able to process so many transactions and stay secure from attackers. The more nodes the harder it is to disrupt the network because of node loss or 51% attacks, which is when one node or group of nodes controls over half the network, which lets them dictate what gets appended to the blockchain. And as such, the network is now centralized, defeating the purpose of a decentralized currency.

Okay, so to summarize, nodes are a bunch of computers that make the blockchain work and stay secure through a process called consensus.

As I said, what method or algorithm of consensus is used depends on the coin. The most famous coin, Bitcoin uses a method known as Proof of Work, otherwise known as mining. Effectively mining Bitcoin these days requires specialized computers that cost a lot of money and if you want to maximize profits, you need a lot of them. Also, you need to get cheap electricity, a lot of cheap electricity. So much like a city that people started getting concerned about the environmental impact of cryptocurrencies because Bitcoin mining alone uses more electricity than 159 different countries put together, 30 times more than all Tesla cars combined, a 0.13% of the total global electricity consumption.

If Bitcoin miners were a country, they'd ranked 61st in the world in terms of energy consumption. Because of the use of energy-hungry mining rigs in BTC mining, miners are concentrated in countries like China where electricity is relatively cheap. Some people argue that such energy consumption is not a waste because you're turning one resource, power, or electricity, into another in terms of monetary value. But we're not going to argue in this article about the merits of cryptocurrency mining.

Some people saw this massive amount of electricity use and thought there should be an alternative consensus algorithm. Hence we have Proof of Stake or simply staking.

I think people unnecessarily make mining and staking way too complicated by going into way too many details. All you really need to know with staking is that the more coin you have, the better staking rewards you get. Think of it as a savings account, the coin's team determines the average staking reward percentage, sort of like the interest percentage you get paid at the bank. And in turn, you get rewarded for not touching your money. The more you lock up or stake, the more you get paid.

It's cool because, for coins like Neo, investors are getting paid several hundred dollars worth in dividends every month for literally doing nothing with the money except keeping it locked away. Even when the markets are down they're still making money because of dividend-yielding proof of stake coins. So when it comes to mining versus staking, I'm not necessarily in favor of one method of consensus over the other. There are significant mostly hypothetical drawbacks to both staking and mining. I believe the future will belong to coins that can marry both.

One way people criticize staking is that you could just literally buy 51% of the supply and dominate the coin to your own benefit. However, my rebuttal is in order to acquire that much of a coin, you would need to erode the supply which would shoot up price and demand to the roof. And for what, there are 1000 other coins out there, if people sense that a coin had become centralized, they would jump ship and the price would crash.

So this brings us to masternodes.

They're a very popular aspect of cryptocurrency right now. Quite simply, masternodes require a very large set amount of a coin and are granted even better dividend rewards than typical rewards earned through mining or staking. Most people think that masternodes are an extension of proof of stake coins exclusively. But that's not quite true.

There are coins out there, e.g. Dash that uses mining to make use of masternodes. So these kinds of nodes aren't exclusive to staking or mining alone. With that being said, running a masternode is just like staking in the sense that you generate passive income through a masternode just by having your coins in a wallet and not moving them, similar to how staker earns in staking systems. I think the big thing here to emphasize is that you can make a passive income with a masternode, just like you could with the staking cryptocurrency, but the rewards in masternodes will be much greater on average.

Since the release of the Dash masternode, many coins have released their variant of the system. The overarching feature that we see with masternodes appears to be the locking of a minimum amount of coins, performing or gaining the ability to do a particular task within the blockchain or ecosystem, and receiving a reward. 

So let's get into the details here, especially how much money do you earn with masternodes? 

Well, that's gonna depend on a couple things you need to consider. Probably the most important thing is that your coin and therefore the team behind it, need to be in it for the long term. If the team is no longer solving, or stop working on the coin, pull the plug, etc., five years down the road, you're going to be hurting because your long term investment is suddenly not worth as much. The problem is that there's no magic bullet here because no one can see the future.

So that's why you need to learn how to evaluate a team and look into the leaders of the project. Have they, for example, had experience with this kind of project or sector before? What happened to their last project, make sure you're not in a pump and dump coin. 

The second thing you need to consider when trying to find a coin is that you need to make sure it has masternodes supported. Now, this is really a double-edged sword. Because if a coin goes into their ICO and they're advertising masternodes, they're gonna get a lot of attention. 

And if they announced masternodes after they've already started trading, that's going to shoot up the prices, people are going to clamor to scoop up enough of the coin in order to run the masternode. I've seen coins such as Vetchain and Waltonchain, raising price massively because they revealed that they'd be adding masternodes.  Really, the secret here is finding coins that might or probably will be out offering a masternode in the future, but that's sort of akin to finding a needle in the haystack.

The third thing you need to know is how the coin facilitates the masternode. For example, masternodes for Waltonchain can receive decent rewards if you just do staking, just leave 5000 WTC in a wallet and don't touch it. But you can receive even better rewards if you actively mined to that wallet address and use your masternode to secure you a better mining yield than if you were mining without a master node.

So you can see masternodes can give you benefits in different forms and it all comes down to your money, making you more money, i.e. the crypto rich get even richer. 

The last thing to consider although it's kind of hard to determine accurately is knowing the payout percentage, especially the ROI or return on investment as the coin appreciates in value over the years. As an example, let's say Walton masternode currently earns X amount at y percentage. But if Waltons price goes five times the current price of z, the investor is going to also earn five times X amount. And that's where things get really interesting. 

Generally, I've seen masternode yield percentages decrease over time, but that can easily be mitigated with an increase in the price of the underlying coin. 

Clearly, masternodes are great, but the crux is finding out about a coin before it's big. Honestly, there's a very little strategy here, other than being constantly on the hunt for these gems. 

So with that in mind, let's conclude this article by covering a couple coins that have masternodes.  What they're worth and what ROI you can expect. As I mentioned earlier, the most famous is Dashcoin. The term masternode originated within the blockchain industry by the startup Dash. 
In the Dash ecosystem, a masternode is a computer also known as a node that runs Dash wallets aiding in the decision tree of the Dash blockchain consensus. The masternodes within Dash help lock transactions, redistribute, and assist in the mixing of coins and voting on the budget funding for the community to use as they best see fit. 

Within the Dash ecosystem, you must have a minimum of 1000 Dash in order to participate as a masternode. When Dash announced masternodes in June of 2015, the going price per 1000 dash was roughly $3,000. Today buying a Dash master node will cost approximately $74,000, the payoff is that the node yields at the current valuation of Dash, 5.77% per annum in dividends. For some people, that's enough to live off of and never have to work again. 

So next up is Zcoin, a really good privacy coin that uses the zero coin protocol. At the time of writing this, it cost around $6,000 to get a masternode and has a masternode return rate of about 15.80%. That being said, in my opinion, Zcoin is a good masternode coin.

If we compare the price of owning a masternode when it was launched and the price now, we can see that the best time to buy into a coin that offers a masternode is when the coin is still in its infancy. I will give you a coin, TerraCredit, that's still in its infancy that you can get its masternode with less than $1000, and be among the top earners in the nearest future. 
TerraCredit is created by Terra Foundation, and they're looking to implement free and faster blockchain-based payment solutions, which will improve and adapt to an ever-changing Financial and Crypto space. As a cryptocurrency, CREDIT offers a decentralized digital payment solution to the World Banked and Unbanked Adult Population. The main function is to be a medium of exchange that facilitates digital transactions, fast and secured with close to zero-fee.

 Just like any other masternode coins, there’s an entry requirement. You need a minimum of 50,000 Credit 2.0 coins and currently costs around $650. This is very cheap but has a very huge potential yield rate. 

At the time of writing this, TerraCredit is still running on its old chain with a circulating supply of 74 billion. This will be swapped on 1st of August in the ratio of 1000:1, bringing the supply to 74 million or thereabout. This means if you are to go for their masternode now, you'd buy 50 million CREDIT 1.0 which when swapped would give you 50,000 CREDIT 2.0, the requirement to own their masternode. 

The swap will drive the price to the roof because CREDIT has a lot of real-world use cases. In essence, the best time to get in is now. 

So, guys, I hope this article has been a pretty substantial guide to the wonderful world of masternodes and the awesome potential they have. As always, one of the things that make one successful in finding masternode coins to invest in is the ability to do your own research. 

Cryptocurrency can be gambling or can be investing, the difference is how you treat it.

To summarize, the best way to find good coins is to be very good at research and analysis. Some important websites you can use for researching masternodes coins are masternodes.pro and masternodes.online. And just be aware that they don't have every coin on there that has masternodes, will be implementing masternodes, or is rumored to have masternodes. So with that, do your research and maybe soon you'll have an awesome portfolio with masternodes that will be earning you enough to live off of.  

No comments

Powered by Blogger.