What Are Masternodes?

Masternodes are servers their owners maintain that provide additional functionalities on top of regular full nodes in a blockchain network.

They play a crucial role in tasks such as anonymizing transactions, clearing transactions, and participating in governance and voting processes.

In blockchain technology, a node refers to a computing device that verifies and validates blocks and transactions within the network.

Evolving Blockchain Infrastructure

Masternodes gained popularity in 2014 when Dash (formerly known as Darkcoin) introduced them to incentivize individuals to maintain a service for the blockchain.

They function as a secondary layer on top of Bitcoin’s blockchain, helping to alleviate the workload on regular nodes.

While masternodes perform the core functions of regular nodes, they also provide additional features and receive rewards for their participation.

Reviving Network Health

Masternodes were developed to address the decline in the number of nodes on a network.

The rising costs and technical challenges associated with running full nodes often resulted in decreased numbers, which could negatively impact the network’s efficiency and profitability.

Masternode operators receive rewards similar to the concept of Proof-of-Work (PoW) in cryptocurrency networks.

Masternodes require collateral in cash or cryptocurrency, and the operators receive regular service contributions.

Masternodes are often regarded as a crucial source of support for a blockchain network, and they are sometimes referred to as “bond validator systems.”