Martin Austwick

MARKETING MANAGER WIREHIVE

Thoughts

What is a Masternode and how do they make money?

Not very long ago, Wirehive launched a new product that goes by the name of Masternode hosting. Hosting your own masternode is a way to make income from crypto currency in a sustainable and automated way. However, most people, even those with a good idea of what crypto currencies are and how they work, don’t really understand what a Masternode is, how it works, and how it can be used to make a passive income.

In our recent series of articles looking at how blockchain actually works we covered the idea of “mining” or “proof of work” as a method of making an income from generating new coins in a crypto currency network.

It is the computers that perform this “mining” function that maintain the blockchain and keep it accurate as it grows, in order to ensure consensus across the entire system.

Masternodes however work in a different way.

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Masternodes maintain the Blockchain

They allocate the task of validating the blockchain to machines that are not set up for “mining”.  It removes the competitive aspect from this and simply rewards nodes for their work.  However the possibility of fraudulent action is a genuine risk and so Masternodes require you to prove a level of commitment to the blockchain by staking a significant number of coins.

These coins are contained within a wallet that is part of the masternode itself and ensure that it is always in the interests of the holder of the node to not attempt to defraud the system.  Unlike mining which earns rewards for successfully beating other miners to the solution, Masternodes are rewarded for existing and doing the work they exist for.

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Return on Investment

In practice what this means is that a masternode is simply a powerful computer that is permanently connected to the network, that contains within it a sizeable financial commitment to the specific blockchain it is helping to maintain.

In theory any computer can become a masternode if you have the stake and are willing to commit it.  But in practice it isn’t quite that simple.  For a masternode to be rewarded it needs to be online constantly.  And this is where Wirehive comes in.

If your masternode goes offline then it can wipe weeks’ worth of earning from it.  With lower value coins this is not a big loss, but for high value coins such as DASH this can be disastrous.

A DASH Masternode requires an investment of 1000 coins, currently priced at over $500 per coin, on top of that one hour’s worth of downtime on the masternode will wipe out any profits at all from that day.

If however your masternode stays online, you can earn a return in the region of 11% per annum.

This is over and above any increase in the value of the coins staked. Dash was valued at $11 on the 1st of January 2017, and $1100 on the 1st January 2018 giving an increase in stake value of over $1M before any of the masternode’s earning potential is added.  Because these rewards are also paid in Dash their value increased by a similar amount over the period.

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A Truly Reliable Service

What this means is that you absolutely need a completely reliable masternode service.  You need the highest quality hosting you can get, and you need to accept that you get what you pay for.  Wirehive does not offer cheap discount hosting.  We offer high quality, reliable, effective hosting.  And that is exactly what you need to make serious money from a Masternode.

That doesn’t mean you cannot make money from a lower value coin masternode on Wirehive servers, but you may need to create a number of nodes on the same hosting to make it financially viable.

Why not get in touch with our specialist masternode team and see how we can help you make a genuinely automated income from Masternode hosting.