Masternode

Written by Max Hinchman

Introduction

Masternodes are full nodes on a blockchain network that perform unique functions in order to ensure the integrity of the network. Masternodes are usually servers but can also be a desktop computer. Because masternodes are also full nodes, they also hold a copy of the blockchain in real time. Their additional tasks differ from blockchain to blockchain but the tasks may include participating in governance through voting and the treasury of the blockchain.

Not all blockchains have masternodes but the well known project that has masternodes is Dash. In order to host a masternode, the Dash network requires several things. The first thing it requires is a server with unlimited internet connect and the second is posting 1000 Dash collateral. Because of the high barriers to entry, masternodes are reserved for those who are willing to make a substantial commitment to maintaining the integrity of the network. The high barrier to entry is in place to protect the network from malicious players. If bitcoin miners grouped together to implement a 51% attack, they would so at their own peril because it would result in collapse of the network. The same mindset is applied to masternodes in a blockchain network.

While masternodes provide an opportunity for passive income, it is important to carefully assess the network itself. Due diligence is critical when preparing to make any large investment, much less a startup blockchain network.

Suggested Reading

Blockchain Basics — What is Masternode

What are Masternodes? by William Peater