The master nodes started to become more popular because of DASH. Operators receive monetary rewards for running a node and must also provide some financial stake to do so.
What is a masternode?
It will help if you understand how the DASH ecosystem works. This will help you understand the value and importance of a masternode. Dash is a popular privacy-altcoin. It uses a proof-of-work system which is very similar to the one bitcoin uses. That is only one part of the ecosystem in which users can generate money.
A masternode is a special server that is setup. Look at a masternode as a special server that is maintained at all times. Masternodes are trustless and decentralized. One major difference for example, DASH masternodes take care of the annonymization part of the Darksend protocol. You can send transactions anonymously by utilizing your dash wallet.
Every masternode provides this anonymization which also protects from an attack. Masternodes ensure transactions are validated very quickly and efficently. A DASH masternode will receive a financial compensation for providing these invaluable services.
“Individual masternodes on the network have a chance to be selected as a recipient of part of each mined block’s value. As time progresses, masternodes will earn the same share per block reward – 45% – yet it will take longer for investors to see a return on investment. For example, with 1,000 masternodes in January 2016, the select masternode would earn 47.3% ROI per year. Increasing the number of nodes fourfold means every node sees 11.8% ROI. It is expected this number will drop to between 4.5% and 18.1% annually by 2029, depending on how many nodes are part of the ecosystem at that time.”
To setup a masternode and get the re-occurring payments owners must place 1,000 DASH into the wallet and setup your node. If you move your funds out the wallet you are no longer eligible for the rewards. You can move the funds out of your wallet but it is not in your best interest. By holding the node you can collect alot of passive income weekly.
Masternodes are a great tool to receive constant passive income. It is a hefty investment so it is vital you make sure you do due diligence in your choices of what coin you choose. If you get in early on a good masternode the risk can be EXTREMELY rewarding.