With Blockchain technology comes all kinds of complexities and technicalities that are being developed, debated, criticized, and implemented. Neither protocol, feature, nor app checks any participant list, and that's a good sign. Criticism, especially constructive criticism, pushes boundaries, stimulates innovation and generates progress.

One particular innovation for the consensus mechanism is the introduction of the Masternode. The masternode is an additional layer on top of the base layer consensus mechanism. For example, Dash is a privacy-based cryptocurrency that uses a Masternode. Additionally, it is a proof-of-work miningable cryptocurrency that, unlike bitcoin, does not fully reward miners and nodes that validate, protect, and share the blockchain.

What are Masternodes

A masternode is simply a cryptocurrency full node or computer wallet that stores a full copy of the blockchain in real time, just like if you had a Bitcoin full node, and is always up and running. But Masternode is very different in its functionality from the normal node.

In general, nodes keep copies of the blockchain at any given time, secure and reverify transactions, and share those copies with other nearby nodes. They get no real incentive to do what they do.

In blockchains that use a masternode mechanism, such as Dash, PIVX, Energi, etc., nodes are as important as miners. The role of miners is to provide computing power to the network and help verify and secure transactions, while the part of the masternode, which solidifies its position by staking minimal amounts depending on the blockchain, is to collect and compile transactions. maintains blockchain records, re-verifies transactions, and propagates the information to all other nodes. In addition, Masternodes can be customized for proof-of-stake and proof-of-work chains.

Just like a full node in any protocol, a Masternode can be run by anyone interested enough. However, there is usually a barrier to entry to ensure that nodes do not act against the system. The barrier to entry is the small stake assumed by the people running the nodes. This is a small collateral, consisting of specific units of a certain cryptocurrency, to run a masternode, which is considered as a guarantee to prevent said person from acting against the network because they have an interest in it.

Due to the inclusion of nodes inherent in the incentive system, Masternodes can also be customized to perform dozens of other functions. For example, governance, privacy, voting, etc., can be done through Masternodes. Hence, they effectively help in network functioning.

Look into Major Masternode Coins

compare masternode coins, we will take the top 5 cryptocurrencies in terms of market capitalization and at least two years of market penetration.

• DASH
• PIVIX
• EtherZero
• ZCoin

Responsibilities of the Masternode

The proof-of-stake algorithm used by the project uses less than 1% of the electricity consumed by traditional mining. They also found a spectrum of features in the masternode technology that have a wide range of applications. This system works to offer higher rewards to those who collect more coins for their nodes; the protocol also provides on-demand visual statistics, such as the Masternode Map. The Masternode Map shows the connections between each node, how they are related and who they are connected to, among other details. Masternode owners choose their level of commitment to supporting the network and get paid based on the effort.