Masternode: what is it?


Cryptocurrencies provide several ways to earn money. If you are interested in additional passive income, masternode may be the best solution. Such a node allows the blockchain to function normally, for which the system gives thanks. The money you receive can be spent developing another business or kept as savings. The Lithuanian crypto license allows you to earn money by legally creating and using wallets and exchanges.

Definition and History

Blockchain is not just a database but a unique software environment that allows crypto assets to function normally. It consists of several nodes (computers or servers), each checks transactions and keeps a complete backup version of all data.

The standard Bitcoin network consists of two varieties of nodes: full and mining. The full node verifies all transactions, while the mining node creates blocks searching for Proof-of-Work. Other cryptocurrencies use masternodes that use Proof of Stake.

Evan Duffield, one of the Bitcoin enthusiasts, tried to modify the Litecoin codebase and create a more private cryptocurrency based on this. It led to the creation of Dash, one of the safest types of currency. And six months later, the first masternodes appeared in this network. It is worth noting Dash is the most popular currency for creating master nodes, as it works stably, and the profit is huge.

So, a masternode is a different type of node that allows you to control the operation of a blockchain. Technically, this is a server with a unique status on the network, which is engaged in instant verification of transactions and blockchain control. The system pays a fixed fee for the provision of such services.

Thus, creating a masternode is the easiest and most reliable way to create passive income. The only drawback is that you need to make a significant investment initially. But practice shows that it pays off within the first year.

How to get additional income? What tools are needed?

Creating a masternode is a rather complicated process. The first thing to decide is the currency. So, masternodes use:

  • Dash;
  • SysCoin;
  • PIVX;
  • Smart Cash;
  • Zcoin;
  • Phore and many others.

The choice depends on many factors, such as what currency you have previously used, the minimum staking size they offer, and what equipment they prefer.

Once you have decided on the currency, you need to make sure that you have 3 main elements:

  • To run a masternode, you need to collect the required coins. Their number depends on your chosen currency; for example, Dash requires 1000 coins.
  • VPS (virtual private server). The system should work without interruption, so you need to use a good server. A 5 USD VPS from Vultr or Digital Ocean is usually sufficient, but the better the hardware, the better. If you decide to buy a server yourself, it is better to choose a device with two cores, 2 GB of memory, 3 TB of bandwidth, and the ability to connect one or more IP addresses.
  • Public IP address. Each masternode must have its unique IP address. You can connect to one server (if it has enough power) several masternodes and a separate IP address for each.

After all technical issues are resolved, you need to connect the equipment to the blockchain. Usually, for this, people try to use the services of a third party, which will ensure smooth operation.

The reward amount depends on the currency you have chosen. It can be about 2 coins in Dash, which is an excellent result. You can keep the received money in your wallet, invest in other crypto projects or convert it into fiat currencies and use it for your own needs. If you decide to stop such cooperation, you can return your pledge coins.

Main risks

Since masternodes do not deal with currency trading, the risks here are pretty small. The only problem is that the value of cryptocurrencies is not controlled by anything, which means that if your currency’s price collapses, you will also receive losses. In addition, many coins have lost their liquidity and ceased to exist, and all depositors were left with nothing. That is why it is necessary to approach a coin choice carefully.

In addition, the server must be running continuously. If it is disconnected from the network for more than an hour, you will also lose a lot of money. So, if you have a large number of masternodes, then it is better to take care of the presence of a generator in case of an emergency power outage.


Among all the ways to make money on cryptocurrencies, the masternode is the most straightforward and reliable. If you are not technically savvy, you can submit all work to the appropriate agency. For a nominal fee, they will be able to choose the most optimal conditions to select the server and IP address. In Lithuania, there is no legislative regulation on earning on masternodes, so if you decide to create and use crypto wallets, you must obtain the appropriate permission.

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