Masternodes are “servers” in the cryptocurrencies network that relay transactions and
sometimes also fulfill other specific functions.
Since Masternodes fulfill special functions for a cryptocurrency network but do cost
money and effort to operate, they are incentivized by gaining a share of the block
rewards in their respective cryptocurrency. The yield varies primarily according to the
masternode count and each coin might have different payout periods. A few coins
pay out daily; others pay out several times a day. This makes masternodes a form to
earn “passive income” on cryptocurrencies without having to run expensive mining
equipment. To create a masternode, a user needs to lock in a specific amount of
coin. Users can then either setup a server to host the masternode or ask a service
provider to do so on their behalf.
How much can I earn from hosting a Masternode?
Masternodes cost money and effort to host so they are paid a share of the block reward to incentivize them. Most Masternodes earn between 5-20% reward. However, as the value of the cryptocurrency is rising and the supply goes down, masternodes should still be sufficiently incentivized.
What is required to host a Masternode?
- Specific Amount of Coins locked: Arguably the hardest part. You must lock a specific amount of coins in your wallet in order to be eligible to host your Masternode. Sometimes you must lock 1,000, 5,000 or even 10,000 Coins. These numbers can differ from Coin to Coin.
- A server or a VPS installed with Linux: In our Masternode Setup Guides we will be using Ubuntu OS. We recommend cheap VPSes such as from Vultr. Generally a low specced one will do. I use the 5 USD ones from Vultr and they work fine.
- A dedicated IP address: These usually come with the VPS/server.
- A little time: When I first got into masternodes, there were only a few guides around and did not cover all the scenarios. It took days for me to figure out the best ways to do everything. However, the process now takes a few minutes. Here are a few guides that I hope will make the process a lot easier.
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