basics of masternodes

basics of masternodes

What are masternodes and what do they do?

First and foremost, like any other node, a masternode is a server within a decentralized network.

Nodes are important because they can process transactions and store the blockchain.

However, a masternode is able to perform tasks that a normal node cannot:

  • Securing and hardening the network due to 24/7 connection
  • Process anonymous and confidential transactions
  • Instant transactions
  • Are entitled to participate in governance and have voting rights
  • Get rewarded by the network for verification work on the blockchain

The tasks and voting rights a masternode has can vary widely and depend on the respective platform.

Many are mistakenly convinced that masternodes is an exclusive proof of stake phenomenon. This is because a higher investment in the crypto currency is necessary for these special nodes and the operators have to own and hold a certain amount of coins.

However, proof of work systems can also use masternodes.

Masternodes should bring more security and scalability for the network through the additional functions.

In addition, the high investment limit prevents monopoly and centralization, such as pool mining. Masternode operators receive regular rewards for the additional tasks they take on for the network. The amount and frequency vary greatly and depend on the platform chosen.

The most famous and first blockchain platform that Masternodes introduced was Dash. Many have tried to copy the success of Dash and its masternodes, so there are numerous platforms today that rely on these particular nodes.

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