The way to make money in virtual currency is not limited to trading (selling and buying currency). One of the non-trade options is to operate something called "master node". As we will explain in detail later, if you operate the master node, you can earn revenue without working. In this article, I will carefully explain the whole of the master node one by one.
What is the master node mechanism?
We will explain the mechanism of the master node by holding down the basics.
Let's understand about nodes
A master node is one of the "nodes". So what is a node? For example, Bitcoin has four types of nodes.
Full Node: Download the entire blockchain
Lightweight (SPV) nodes: Download part of a blockchain
Minor (miner): approve the transaction by mining (mining)
Wallet: manage address (account) and secret key (password)
A node is any terminal that connects to the network. Specifically, it includes PCs, servers, and smartphones.
Approve transaction by master node
As you can see, there is no "master node" in Bitcoin. Master nodes do not exist in every virtual currency. So, for example, let's consider a virtual currency called DASH, which can build a master node.
The minors are the ones who approve bitcoin transactions. On the other hand, it is the "master node" that approves DASH transactions. Master nodes that approve transactions are selected at random without the need for complicated calculations like mining, so the approval time is much faster.
However, the number of master nodes in a DASH network is sometimes criticized as centralized because it is very small compared to the number of bitcoin minors.
Conditions for building a master node
As a condition for building a master node, you need to hold more than the specified number of coins.
Specifically how many coins do you need? In order to become a master node in DASH mentioned above, it is necessary to have 1,000 DASH or more. The price of 1 DASH as of April 2019 (at the time of writing) is 13,828 yen, so a DASH equivalent to about 14 million yen is required.
Aren't many people surprised by the size of the numbers? However, of course there are also currencies that allow you to build a master node for less, and the conditions are different.
What are the benefits of master nodes?
There are three advantages to building a master node.
You can get money without working
The first advantage is that no effort is required to operate the master node. In other words, it means "unpaid income". If you keep the required number and keep the terminal up and running, money will come to you.
There is no need to have high-performance hardware
The second advantage is that you do not have to provide high-performance hardware. With Bitcoin mining, it is almost impossible to receive rewards if you do not have a device dedicated to the processing of mining calculations. The master node is compatible with a general PC, so there is no need to prepare such special hardware.
Gaining profits at high interest rates
The third benefit is that you can get a high interest rate of around 10% on average every month. In general, it is difficult to find investment targets with an average interest rate of around 10% monthly. Even if there is, it will be very high risk.
What are the disadvantages of master nodes?
There are three disadvantages to master nodes.
Expensive to prepare the necessary coins
The first disadvantage is that it costs money to prepare the necessary coins. I mentioned earlier that it would cost about 14 million yen to prepare the 1,000 DASH needed to build the DASH master node. Although there are differences between currencies, the initial costs are never cheap. Therefore, you need to carefully consider which currency's master node to build.
The risk of coin price fluctuation is large
The second disadvantage is the large risk of coin price fluctuations. We all know that rising and falling prices of virtual currency are fierce compared to traditional investment products. When building a master node and earning profits, the magnitude of this price fluctuation risk will be the biggest obstacle.
Electricity costs to operate the node for 24 hours
The third disadvantage is that it costs electricity for operating the node 24 hours a day. However, the operation of the master node does not require a huge amount of calculation processing like mining. So you don't have to worry too much.
The important thing when deciding the currency to build the master node
If you are interested in the operation of the master node after reading the above, it is very important to correctly determine "which currency's master node to build". To do this, three factors need to be considered. In addition, in order to know the actual data about the master node , it is good to refer to MasterNodes.Pro .
Initial cost
The first factor is the initial cost. This has been mentioned several times so far, so no explanation is necessary. The cost of preparing the coins needed to build the master node. Think against your budget.
Interest rate
The second factor is the interest rate. It goes without saying that the higher the interest rate, the higher the profit. But in the world of investment, return and risk are one and the same. Therefore, it is necessary to consider the interest rate in consideration of the balance with the risks described next.
Price fluctuation risk
The third factor is the price fluctuation risk mentioned in the previous chapter. There are various things that affect price fluctuation risk, but they can be classified into two: 1 external factor and 2 internal factor.
External factors, roughly speaking, are economy and politics. In other words, the market conditions may be good, regulatory, taxation, etc.
Internal factors are, in other words, the fundamentals of the currency. For example, business models, technological advantages, and governance.
Master node summary
In this article, we have described the master node. Even if you were not familiar with the words, maybe the image of the master node was transmitted? It's hard to feel free to get started with master nodes, but you should also be able to expand your horizons just by knowing that virtual currencies have more ways to make money. If you want to know more about master nodes, you should investigate in detail based on the contents of this article.