Running masternodes

Running masternodes: Are they profitable in 2019?

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A masternode can be described as a computer or node which participates in a Blockchain network of computers. This node has a full and latest copy of the actual Blockchain stored on its hard disk. One of the most famous nodes out there are the Bitcoin full nodes, but also other Blockchain networks use this principle. So can you compare a Bitcoin full node with other masternodes out there? The answer is no.

What are masternodes

Masternodes have properties which differ from normal nodes on a Blockchain network. The most common difference lies in the fact that they perform different tasks compared with common nodes. Some of the special tasks they deliver are:

  • Increasing privacy of transactions
  • Doing instant transactions
  • Participating in governance and voting
  • Enable budgeting and treasury systems in cryptocurrency

Like I mentioned earlier, the masternodes are participating in a network and are communicating with each other as any other Blockchain network does. This to keep the most crucial element of a Blockchain network intact, which is decentralization. So if you are interested in passive income and holding, are running masternodes still profitable?

Running masternodes is it profitable

What does it take to run a single masternode? Every single person who is interested in running a node is free to do this. There are no constraints or barriers just like setting up a full Bitcoin node. However, running a masternode comes with an obligation. One needs to commit or collateralize certain units of a particular cryptocurrency to be able to run a full masternode.

The most important reason for this is by collateralizing certain units the masternode owner has something at stake in this holding game. Holding a large amount of a certain cryptocurrency in a masternode ensures that the owner can’t cheat and secures the total Blockchain network. This holding comes with rewards whereby after a certain block is mined masternode holders are rewarded in cryptocurrency.

Dash

Dash masternode landing page

Dash(DASH), was being introduced to the cryptocurrency markets in 2014. Back then the coin had a different name and was called Darkcoin. In March 2015, the name of the cryptocurrency was changed to Dash. Dash wants to be the cryptocurrency which is mainly focused on privacy. With DASH coins it’s possible to do privacy-centric and instant transactions. The idea of this digital currency is to be the online digital cash which is similar to the ‘fiat-cash’ in the offline world. To protect privacy transactions being processed on the Blockchain are made anonymous. The technology the Dash team uses to anonymize transactions is called DarkSend. The name DarkSend comes from the CoinJoin project which took part in making Bitcoin transaction more anonymous.

With DASH, payments are private and cannot be tracked along with balances. This is different from the Bitcoin Blockchain where every public key is traceable and balances are open for the public. To guarantee privacy of transaction on the Blockchain, Dash uses a technology which is called InstantX. When sending funds over the network, users can use InstantX to make transactions irreversible within four seconds.

What is needed to host a DASH masternode

  • Running masternodes of DASH requires 1000 coins. If you don’t have any coins already this can be difficult, because of the limited supply of 8,7 million coins.
  • A server in the cloud called VPS. On this server you have to run Linux or Ubuntu. Best is to install the latest version of this software. Best places to go are Digital Ocean and Vultr(About 5 US Dollar pro month)
  • A dedicated IP-Address. This comes with the VPS server, but you should check this option.
Dash masternode stats
DASH masternode stats – resource:masternodes.online




Horizen

Horizen masternode landingpage

Horizen(formerly ZenCash) is also a cryptocurrency coin which is focused on privacy. The project’s goal is to provide privacy to users. To do so, this incentive-driven application platform aims to provide control of their own digital footprint. In May 2017, this new cryptocurrency project was launched. This new project launch didn’t occur by organizing an ICO or making coins available by pre-mine which isn’t very common in the cryptocurrency community. This new coin called ZEN want to enable real-life use cases, including the ability to privately chat with others, publish information and go anywhere on the web with complete privacy.

By running masternodes Horizen has three types of nodes:

  1. Regular full nodes – A full node with the ability to run a wallet
  2. Secure nodes – A full node which support TLS encryption for communication between
  3. Super nodes – Very powerful nodes(processing power) for sidechain operations and support of Dapps.

What is needed to host a supernode(ZEN-500)

  • 500 ZEN coins. If you don’t have any coins already this can be difficult, because there are currently 6 million in circulation.
  • A server in the cloud called VPS. On this server you have to run Linux or Ubuntu. Best is to install the latest version of this software. Best places to go are Digital Ocean and Vultr(About 5 US Dollar pro month)
  • 8 GB RAM memory
  • Multiple CPU cores
  • Minimal storage capacity of 100 GB
ZEN-500 masternode
ZEN-500 masternode stats – resource:masternodes.online




Zcoin

Zcoin masternode landingpage

Zcoin(XZC) is launched in 2016 as a privacy-focused cryptocurrency token based on open-source principles. The way they offer privacy on the Blockchain is by their own protocol or zero-knowledge proofs of Zcoin. This Zcoin protocol was first being introduced in the Bitcoin source code by Johns Hopkins University professor Matthew D. Green and offers some anonymity to Bitcoin transactions. Zcoin extended this Zcoin protocol in their code base and build a new feature on it. This feature enables anonymity on Blockchain by deleting the history of a certain transaction on the Blockchain. Normally when a sender wants to transfer funds to a receiver this transaction can be traced on the Bitcoin Blockchain. Zcoin will remove the link between sender and receiver so anonymity of transactions can be guaranteed. Zcoin operates a multi-node model where mining nodes verify Blockchain transactions and Znodes store Blockchain data.

What is needed to host a Znode

  • 1000 XZC coins
  • A server in the cloud called VPS. On this server you have to run Linux or Ubuntu. Best is to install the latest version of this software. Best places to go are Digital Ocean and Vultr(About 5 US Dollar pro month)
  • 2 GB RAM memory
  • 40 GB storage harddisk
XZC masternode stats

XZC masternode stats – resource:masternodes.online




Pivx

Pivx landingpage

PIVX is a privacy coin based on the most updated Bitcoin core(0.10.x) and has been developed as a new clone of the DASH coin. One can say that DASH and PIVX are very similar coins. PIVX has features such as masternodes, instant transactions(SwiftTX) and private transfer based on the ‘coinjoin’ method. These features are also included in the DASH implementation. Because PIVX is very similar to DASH and shares the same code base, the development team of PIV has to work closely with the DASH team. When an update needs to be done on DASH the PIVX developers also need to update their code because there is a strong dependency.

PIVX stands for Private Instant Verified Transaction and is an MIT licensed anonymity-based fork of DASH coin. The main difference compared to DASH is that PIVX uses a ‘proof of stake’ mechanism to handle transactions on the Blockchain. PIVX claims to be a 2-tier currency which can be split in two: ordinary transactions and anonymous transactions.

What is needed to host a PIVX node

  • 10000 PIVX coins
  • A main computer(at your home) to run a local wallet and store your 10000 PIVX coins
  • A server in the cloud called VPS. On this server you have to run Linux or Ubuntu. Best is to install the latest version of this software. Best places to go are Digital Ocean and Vultr(About 5 US Dollar pro month)
  • A unique IP address for your VPS
PIVX masternode stats

PIVX masternode stats – resource:masternodes.online




SmartCash

SmartCash masternode landingpage

SmartCash is a coin which is created based on the principles to deliver easily interchangeable fast and user-friendly cryptocurrency. Their goal is to create the sharpest and fastest growing currency or digital cash. It’s a community-driven coin also built of the ‘Zerocash’ protocol which DASH uses. Their aiming to deliver very fast transaction times and privacy for the users on the network. They don’t like the ‘central authority model’ and are using their foundation for governance.

What is SmartCash

The way to do this is by setting up a large community, hiring talented developers and convincing retailers or shop-owners all over the world. By creating a community and using traditional marketing methods they are focusing on growing organically.

Running masternodes vs Smartnodes

Smartnodes or masternodes are servers that run a Smartcash wallet and handle transactions on the Blockchain. The servers provide the following services:

  • InstantPay – These are instant transactions and it allows transaction to be locked in about a second. There is no risk of double spending and it’s trustworthy.
  • SmartRewards – These are rewards for node holders and are calculated by the nodes and automatically distributed to the owners of nodes.

What do you need to host a SmartNode

  • 100000 SmartCash coins
  • A main computer(at your home) to run a local wallet and store your 100000 SmartCash coins
  • A server in the cloud called VPS. On this server you have to run Linux or Ubuntu. Best is to install the latest version of this software. Best places to go are Digital Ocean and Vultr(About 5 US Dollar pro month)
  • A unique IP address for your VPS

Non technical solution

For people who are not really interested in this ‘masternode tech’ or are not comfortable with running own nodes in the cloud; there is another opportunity for you. Read this article about participating a smartcash masternode and still earn those extra ROI(20%) on your crypto bag.


SmartCash masternode stats – resource:masternodes.online



Bonus video

Running masternodes explained by PIVX

Running masternodes conclusion

Masternodes have the reputation to be a passive income generator tool for the few ‘rich’ cryptocurrency holders out there. As we all know the cryptocurrency markets are currently bottoming out and prices are very low compared to a year ago. This comes with an opportunity for investors who are not interested in trading crypto. Nowadays, investing large amounts of coins and setting up a profitable masternode comes with lower risk. If you are a believer in this cryptocurrency market and want to profit out of passive income, running masternodes is a good way to do this.

Disclosure: This post contains affiliate links. This means I may make a small commission if you make a purchase. This doesn’t cost you any more but it does help me to continue publishing cool and actual content about Bitcoin & Crypto – Thank you for your support!

Jelmer Steenhuis

Online entrepreneur at uDigitize
Crypto believer and 'Hodler' of Bitcoin since the early days. Spreading the word about this exciting new technology..
Jelmer Steenhuis

2 Replies to “Running masternodes: Are they profitable in 2019?”

  1. Note that SmartCash increased the requirement from 10,000 to 100,000.
    We were running 3 Smartnodes on Vultr until they changed the requirement around Feb 2019. At this point, we will just HODL. We are about to run 5 Harmony foundational nodes.

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