April 23, 2018 -- ADVFN Crypto
NewsWire -- If you’ve been reading about the crypto world at all
lately, then I’d guess that you’ve already heard
about Masternodes. From Dash to Pivx
to Divx, they’re all over the crypto-sphere. What you may not know
is: what exactly is a Masternode (PIVX)?
It all starts with a Proof-of-Stake
cryptocurrency network. Proof-of-Work networks do
not have Masternodes. To review, a Proof-of-Stake network is
structured in a way that the nodes that own the most coins have the
most power, though this is somewhat of an oversimplification of
this concept.
A Proof-of-Stake network also
includes the capability of certain nodes earning constant coins
from the network when they help to lead it. To earn this leader or
Masternode status, the network usually first requires what can be
thought of as a minimum demonstration of stake.
Overall, this means that a user
needs to deposit a certain amount of coins to be awarded Masternode
status. For example, in the case of PIVX, one Masternode costs 10,000 PIVX
coins and requires that the user running the Masternode
participates in the governance of the network in specific
ways.
This would include voting on
network updates, as well as helping to secure the PIVX network. In
addition and more specifically, PIVX Masternodes also help to
anonymize network transactions, facilitate instant transactions and
validate all block transactions. Finally, in particular, PIVX
Masternode holders earn consistent coins from the block reward for
their services.
In essence, thinking of this reward
as PIVX terms it can help to understand it. It’s basically interest
on the Masternode’s stake as a sort of thanks for what it does for
the network. Therefore, it’s not getting free money and any network
that promises this without any shouldered responsibility should be
avoided.
Ask yourself simply: how can a
network be trusted that doesn’t incentivize its most valuable users
to promote security and governance?
All in all, that is the gist of
Masternodes, including the good and the bad sides of using them. We
hope that with this simple explanation, you can feel more
comfortable investing in a Proof-of-Stake cryptocurrency network.
Remember, nothing is certain in crypto but with the right
knowledge, you can avoid many of the pitfalls that regularly come
to pass.
BY: BGN Editorial Staff