Today's topic will be Znodes, but before we get into that, do check out my other two posts, as you will need to understand these two topics before this topic.
This first: https://steemit.com/cryptocurrency/@stammy/zcoin-with-joyce-ep01-why-privacy-and-fungibility-in-a-cryptocurrency-is-important
This second: https://steemit.com/cryptocurrency/@stammy/zcoin-with-joyce-ep02-what-is-mining-and-what-is-mtp
Let's just do a short recap.
Let's start with mining.
Mining has two parts, first, you make a transaction, and second, you verify the transaction.
In ZCoin, it uses something called the Zero Coin Protocol.
It is basically burning old coins with history, in exchange for new coins with zero transaction history.
Zero coin transactions are also much larger than regular transactions.
This results in the accumulation of data in the blockchain, and what happens over time is a scaling problem, because there are added costs to store all this data on the blockchain Because you basically will need additional hard disk space.
It also takes a large amount of computational power.
A regular transaction usually takes less than a millisecond to verify, however with Zerocoin transactions, it can take up to 0.5 - 2 seconds, or more.
Now, this is where we get to the Znode topic.
BUT, what is a node again?
A node is a computer that stores all the transaction history of a coin.
It also verifies that the transactions are valid.
Miners submit work & solutions to nodes.
In Bitcoin, Nodes aren't paid anything, but they still have to host nodes to maintain operation.
This is seen both in mining pools, and exchanges.
However, as time progresses, the cost in terms of data storage space goes up.
Currently, with Bitcoin is costs about 115GB, and with Etherum, with is relatively new cryptocurrency of two years, it costs a 100GB.
The bigger the network, and the more transactions it has, the higher the cost to build a node.
Let me ask you, would you want to dedicate potentially a hundred gigabyte of your computer's data for free?
NOT for free. (gimme money I will do it)
Even the largest games take about 30+GB.
And you have this coin application that's potentially taking a 100GB of your computer's data.
Now let's answer the question of what a Znode is.
A Znode is like an X-men version of a regular node, or rather a super upgraded version of a regular node.
But currently, Znodes still function much like a regular node, except that they will most likely will have better hardware and connectivity.
Eventually however, they will be the only nodes to process Zerocoin transactions.
But they will still continue processing regular transactions.
Znode acts like a second layer.
The Znode layer can keep up with a large number of Zerocoin transactions without being chocked up.
So then how do you qualify as a Znode?
Well first, you need a thousand Zcoins to be deposited into the Znode holders address.
This is to act as a stake.
It's important for investors to make sure they have a stake in a coin, so they act in the best interest of the coin.
This also prevents someone from spinning up thousands and thousands of node to cause a cyber attack.
In many other currencies, only the miners get the block reward.
But here, the block reward is divided to those that help secure the network, and then the other part of it is dedicated to those that help maintain the network, so 30% of it goes to maintenance.
That means Znodes get 30% of the block reward.
The block reward for nodes will remain a constant 30%.
But the amount returns you get is variable because there is a 20% - 30% interest per Annum.
The more nodes that are online, the more you have to share the reward, so you would get less in return.
This incentivizes people to have the necessary hardware, AND to keep the network up and running, rather than rely on altruism.
In the future is intended for Znodes to be the only form of nodes to process Zerocoin transactions.
This allows other regular nodes to have lower requirements and to be lightweight.
A high percentage of nodes need to come to the same results for the transaction to be processed.
It uses something called a peer reputation management.
In some other Incentivised node systems, like in dash, there's a certain amount of trust that is needed to ensure the nodes are maintaining your privacy, because, in the process of mixing transactions, they will have access to some of the information.
With Znodes, this isn't an issue because the use of zero-knowledge proof means there's no mixing to be seen.
The nodes are verifying mathematical proof to show that a person doing a Zerocoin spend transaction has done a valid Zerocoin mint transaction, without revealing which mint it is.
Znodes also don't affect the liquidity of ZCoin.
Even if you need a THOUSAND ZCoins to be a Znode.
Let's say if you really need to withdraw some of those coins, you can do so at any given time.
Just that you will go from a Znode back into a regular node and function as a regular node would.
We will now move to the FAQ about Znodes.
Q: What do you need to host a Znode?
A: VPS with 1GB of RAM & 25+GB storage, 100XZC, Fixed IP address, a little time to set up.
Q: What happens if my Znode gets hacked? Will I lose all my funds?
A: No, your Znode does not hold any funds, it merely has a marker that is a link to your account to ensure you have to prerequisite 1000 sequence to be a Znode.
If you Znode is hacked, all that really happens is that they can stop it, and prevent you may not get your payout.
Q: How much do I earn?
A: This is dependent on how many Znodes are out there in the network.
The more nodes there are the smaller your share of these block reward.
Q: Where do you Znodes go, and how often do I get my payout?
A: The Znode pay directly to your Znode address.
Znodes also operate on a cue system.
Depending on how many nodes there are, it might take a couple of days.
However, if it's your first time, the payout usually takes a little bit longer.
Q: What if my Znode goes offline? Do I lose my payout?
A: There is a grace period for about an hour, and if you're not online within an hour you will lose your place in the queue, means you will have to queue up from the back again.
Q: Is it difficult to set up a Znode?
A: It is not particularly difficult, but you do need some IT familiarity.
There will be Znode operators that to set it up and keep it running for you, but it comes at a fee.
Q: What happens when I don't have enough to host a Znode?
A: Well several community members have offered services for Znode pools, or shared Znodes.
However, this will require a lot of trust, because the person organizing this Znode will have to be holding your funds. (Only do this with people you can trust, as they can run away with your money or have the technical knowledge to keep your funds safe.)
If you have more questions, feel free to leave it in the comments of the video that I put a link to on top. (V It's over here too!! V)