SO...WHAT IS A MASTERNODE?
A masternode is simply a cryptocurrency full node or computer wallet that keeps the full copy of the blockchain in real-time. But masternodes are considerably different in their functionality than normal nodes.
Apart from keeping a copy of the full blockchain in real-time and relaying blocks/transactions, just like a full node does on the Bitcoin network, masternodes fulfill other functions as well:
Increase the privacy of transactions
Enable users to instantly send funds to one another
Participate in governance/voting
Some serve the role of a treasury in some coin networks
Throughout their short history, masternodes have been compared to savings accounts – they play an important role in the coin network and those who create and maintain them get rewarded for their efforts – much like a bank offers savings with varying interest rates to encourage people to hold their money with it. -
Masternodes work on behalf of the coin. Since masternode cryptocurrencies are decentralized, they must have servers in many places in the network (and correspondingly, all over the world) to provide scalibility, redundancy, and security for network transactions.
These transactions can be validating mined blocks (block rewards) or validating coin transfers (transactions) between addresses in the network. Some masternode coins also support Proof-of-Stake alongside masternodes, but others do not. Masternodes are also used as a formal communication process between coin developers and coin holders, somewhat like how a shareholder might be invited to vote upon a corporation's future initiatives or governance changes via a shareholder ballot. -
When a masternode is set up, it begins to do work on behalf of the coin network. However, it will not immediately be eligible to participate in masternode rewards. All coins have a waiting period where the masternode must demonstrate it is participating actively, is stable, and is handling sufficient work for the network.
During this time, the rewards are paid out to other masternodes and the new masternode is excluded. Think of this time as a try-out period for the new masternode. Once a new masternode has met stability and participation thresholds, it then becomes eligible for rewards. The masternode must receive votes from other masternodes to get into the rewards or "winners" queue. All of the masternodes will track which nodes have been paid out over a given cycle, so no single masternode can hoard or receive multiple payouts per round.
Thus, the frequency of payouts is an ever changing calculation of how many masternodes are eligible for rewards, how many transactions or blocks are being mined, and whether there are other masternodes to get rewards soon, or not.
I WANT TO PARTICIPATE, BUT HOW?
So you might be asking yourself the same question that many crypto investors have, how can I participate in those masternode rewards? Easy, there are many 3rd party groups that provide shared masternode services to the public. So what is a shared masternode? A shared masternode is where a group of investors come together with an amount that will equal a whole masternode, and then, when the masternode rewards get distributed, each will take a percentage based on the amount of cryptocurrencies they invested towards that full masternode.
Every currency’s masternode works differently, so rewards are distributed differently as well. On that same token, each masternode requires a different quantity of that respective coins currency to create a full masternode. For example, $PAC requires 500,000 $PAC coins, where SHND requires 5M SHND to create 1 SHMN, and it takes 100 SHMN to create a whole masternode. For more information about a particular masternode you wish to participate in, be sure to ask a member of that particular currencies team for more information. Remember, as always, DO YOUR OWN RESEARCH.
Below is a link to one of our recommended shared masternode sites, they have the Stayi stamp of approval! Be sure to pay them a visit at www.pacnode.net, or visit your favorite shared masternode service provider for more information. (Note: we are not affiliated with pacnode.net, nor do we make any claims of such, we simply trust their work ethics based on great personal reviews)