Zen And The Art Of Masternode Maintenance

Are you still day trading or do you own Masternodes already?

You might know the fun times of trading a coin that skyrockets and that depressing jump-out-of-the-window feeling if your holdings suddenly dump. A trader must have the ability to handle that kind of stress; otherwise, their sanity will suffer over time. But how “WOW!” would it feel to hold a good amount of rock-solid coins and to get paid for simply holding them? Very simply put, this is what you can achieve by running masternodes. This is the “Next Gen Hodl. If we put the day traders rock aside, which we sometimes tend to live under, we can recognize the thriving rise and hype of masternodes. It is all the rage right now and an excellent opportunity to earn passive income, just by holding promising coins and running a masternode on a machine.  No more day trading stress, a rising income, paid in upfront determined cycles – Let’s take a breath and dive into “Zen and the Art of Masternode Maintenance”. 

What is a masternode?

Many people seem to confuse masternodes with mining, and whilst it is very similar in some basic elements, it is much more accessible to the majority. In this post, we want to clarify what a masternode is, why it makes sense to participate in ICOs that feature masternodes, why masternode-featuring coins are often a good investment, and how to generate long-term passive income by using this technology.

By running a masternode, you run a full node on your server or machine, storing a copy of a particular cryptocurrency blockchain. Masternodes don’t mint new coins but perform a list of tasks, which are needed for several features a coin offers. In comparison to a common bitcoin node, it does not just keep the full blockchain and/or relaying transactions and blocks, but runs more specific tasks and enables the coin to offer particular functions. The most popular masternode coins might be DASH or PIVX, and you will find the option to run a masternode on several other privacy-focused coins, as it makes so much more sense in this arena.

The backbone of those privacy coins

Masternodes are the backbone of those privacy coins and are similar to Bitcoin nodes; they make it possible to run the network trustlessly and in a decentralized manner.  Additionally, they add the masternode-specific features to the network, like a privacy feature in this instance. By an implemented anonymization protocol (e.g., Darksend), for example, the network makes use of the existing masternodes to validate the transaction and to process it in an anonymized way. For providing this machine calculation power, the masternode owner gets a financial compensation. Typical functions provided by masternodes to the network of a cryptocurrency are sending instant transactions, anonymizing them, participating in voting, and governance – there are countless creative ways a masternode can achieve.

The main advantage in comparison to mining is that you don’t need an expensive hardware setup to run a masternode, but instead, you will need to hold a given amount of that coin in your wallet to be able to act as a masternode. Furthermore, you will be rewarded with a constant passive income stream for running that node. The compensation can vary by different factors, like how many coins or tokens you hold, how busy the network is, or how the fee structure is designed.  In one lengthy sentence: you set up a wallet on a machine with a dedicated IP, fund it with a defined minimum amount of coins/tokens and contribute to the network by letting it perform several actions – for that you will be financially rewarded – and those rewards are really juicy sometimes.

How to run a masternode?

• Holding a defined amount

First of all, you need to hold a certain amount of coins of that particular masternode coin. There are many different kinds of models on how much stake you need to hold to run a masternode, so it might be an excellent idea to watch out for ICOs that feature masternodes. This is your best bet to get the needed stakes to run a masternode for the cheapest price possible. If you missed an ICO for a project you are interested in, you might want to wait for a dip to purchase at a good price. One can say the  Masternodes concept is something like a “Next Gen Hodl. For PIVX, for example, you would need to hold 10k of  PIVX. Quite a stack to hodl.

• Run a server on a dedicated IP

If you never used a command-line interface (often referred to as CLI), this is going to be hard for you – not impossible, though as we all can learn, if the motivation is given. For several reasons, a virtual private server (ref. as VPS) is not inevitable in every case, but for most of the Masternodes. The process is not always the same, but mostly you want to install a controller wallet on your local machine and the Masternode on the VPS. If you want to get a basic picture of how such a thing is done, check the PIVX Masternode setup tutorial here as an example. Not all Masternodes require you to have it up and running 24/7 and some have even easy Windows installation routines, though the majority will be a pain to set up if you are not familiar with that kind of stuff. As always, there are services to purchase to help you get started.

How much can you earn with a Masternode?

Masternodes can be rewarding, but they also come with risks, particularly when it comes to locking up your funds. It’s essential to do thorough research before making any decisions. For example, one of our favorite long-term holdings, $Strat, requires a significant initial investment. To operate a Tumblebit node and contribute to the Breeze privacy protocol, you need 250,000 Strats. Therefore, if you were to invest now to set up a masternode, it would require a substantial upfront cost.If you had invested in $Strat at its ICO price of just $0.007, you would have increased your return on investment simply by holding the coin, without much effort on your part. That said, Stratis will introduce various types of masternodes in the future, which will allow for cheaper entry points.To get a clear idea of the potential rewards, you can use Stratispool to calculate your returns. Another promising example is HALO, which features tiered masternodes that make participation more accessible.

5-Minute Masternode Setup System gives you several options:

Tier 1 Halo Masternodes
Block reward of 4.5 Halo / received service fees of 5.00%.
Initial Investment: 500 Halo ( $5000 USD* ).
Estimated Reward:  0.324 Halo per day and 9.72 Halo per month.

Tier 2 Halo Masternodes
Block reward of 7.5 Halo / received service fees of 7.5%
Initial Investment: 1000 Halo ( $10,000 USD* ).
Estimated Reward: 0.675 coins per day and 20.25 Halo per month.

Tier 3 Halo Masternodes
Block reward of 5.50 Halo / received service fees 12.50% service fees.
Initial Investment: 2500 Halo ( $25,000 USD* ).
Estimated Reward: 1.98 coins per day and 59.4 Halo per month.

Tier 4 Halo Masternodes
Block reward of 10Halo / received service fees 25% service fees.
Initial Investment: 7500 Halo ( $75,000 USD* ).
Estimated Reward: 7.2 coins per day and 216 Halo per month.

Source: Halo Whitepaper

Imagine that compounding effect

By setting up your masternode, you generate more Halo, which means higher tiers, which means higher rewards. You get the picture. However, one has to keep in mind that you should run a Masternode for a particular project only if you believe in its success. The more Halo is used, the more blocks and fees will be generated in which you participate. If Halo flops in terms of community acceptance, you will have thousands of Halos sitting around, decreasing in value. Doing your research is a mus, before any investment decision.

Another example is LUX

We told you about our investment in our HODL THAT! #2 issue when the price was 0.00038 sat. See where the price is right now: Check out the masternode stats and do the math on how rewarding LUX would have been if you bought those coins when we talked about it and used them for a masternode! The insane growth of value for LUX is also due to the rewarding masternodes, out of a total supply of 400k, there are 210k locked in masternodes due to the great rewards (annual ROI of around ~50%), now bring that into the picture with the basic economics of supply & demand. To sum up, we have the growth in the value of the token or coin itself plus the very nice rewards it offers. Outlook is very bright indeed. This effect can be seen on many tokens and coins that offer Masternodes, as there is a strong incentive to hold, which ultimately decreases the available supply.

This is why we call Masternodes the “Next Gen Hodl”. It is the Zen way of growing your money. No more fear sweat with your day trades, just throw that masternode on and relax, see your investment grow over time, may BTC soar, may BTC dump – you just sit back and enjoy the show.

Getting started with Masternodes: A fair warning

Yes, those insane rewards on top of your “Hodl-Gains” can be very teasing. At the same time, most of the projects that have proven themselves already are pretty expensive to get into. That being said, there are shitcoins which run masternodes, but only because it is a cheap opportunity to get into the Masternode game, it might not be a good idea to go cheap. We urge you to research the projects as much as you can, so that you never invest money you can’t afford to lose. This is not a rock-solid way to double your money in one year, as with every well-paying opportunity, there is risk involved. Just imagine Bitconnect would have run masternodes – where would your investment be now? By running a Masternode, you are not a trader anymore; you are an actively participating investor. Think like one. What will this project offer to the world, and why is it needed? Which guys are behind the project, and what do they have cooking on the stove for the future?

Generally speaking, with all sorts of regulations incoming, new tax laws popping up everywhere, and the mass adoption, many investors see a rising demand for privacy coins. Those are often dependent on Masternode technology, but at the same time, this market seems to be pretty saturated already. But keep your eyes and ears open for privacy-focused ICOs in connection with Masternodes – it might be a great opportunity to become a master of the node!

The Zencash Masternodes (reader contribution):

An interesting upcoming masternode project for ZENcash has been contributed by a Smart Options reader. He has gathered quite a few interesting facts that we want to share with you. The following content has been contributed by Edwing G.:

ZenCash is a ZCash code fork with the same ZK-Snark parameters. Instead of aiming to be only a currency, it is more or less a privacy platform with ZK-Snarks at the core. It has adopted many great implementations of other coins and has partnered up with a research team (IOHK (1, 2)) on DAG scaling, making it the very first anonymous graph.

The following features pretty much define ZenCash:

• Node staking (+9000 nodes online at the moment, which is not much less than Bitcoin)
• Implementation of smart contracts
• Treasury and voting system
• Implementation of a DAO
• Snark messaging system
• Snark file storage

My growing interest in this project comes from having had a few back-and-forth emails with their team, as it was confirmed to me that ZenCash is looking to establish a self-sustaining economic system. My suggestion to them was to implement a decentralized lending platform similar to MakerDAO, and it was well-received.

As far as it comes to their node rewards:   Securenode = 42 ZEN for 10% profits in a big pool

Supernode = 500 ZEN for 10% profits in a pool with many fewer participants

(10% to the treasury system 70% of the rewards to PoW mining)  

Supernodes aren’t out yet, but with their whitepaper coming up in the next few days, it is possible that we will see some more information on them. On Telegram, the staff has been stating that the planned release of Supernodes will be around the end of May to mid-June. Right now, each Securenode generates around 1~ ZEN each month. Hosting can be done on a VPS, and the coins needed for staking collateral can be held in cold storage, as the node and wallet only need to point at each other. It is possible to host a node as cheap as 3$, but this requires 2-3 nodes per host and some sysadmin background. There is some managed hosting starting around 9.99$ up to 15$ per month per node. So far, that’s it. I may have overlooked some items, but that’s the most straightforward overview I can give on ZenCash.

Thank you, Edwin, for this valuable roundup!

Important Masternode links for your research

https://masternodes.online/