Masternode : One of the most common terms in 2018 in the world of Blockchain and cryptocurrency. But what exactly is it? Is it really a good way to generate income? Which one to choose?
This article aims to help you understand and choose wisely which Masternode is worth an investment.
Masternode : a little reminder
Masternodes are specific nodes that can be found through the Blockchain network. They perform various tasks and provide an optimal level of security and confidentiality in the blockchain. The particularity of these servers lies in their operation 24 hours per day, and 7 days per week.
To be able to hold one of these Masternodes, there are several methods:
- Buy the number of cryptocurrencies needed at the Masternodes – for example the Dash with 1000 coin
- Use “Shared Masternodes” allowing you to share it with other investors.
Where to find Masternode and where to invest?
To find and choose a Masternode, it’s very simple. Several websites provide informations about Masternodes. Some well known websites are:
First step to choose a Masternode: the price.
Obviously the price will be different depending on the Masternode. For instance, the Dash, which is the most expensive Masternode on the market. The price is around 220,000 € for one of the most stable ROIs on the market, with around 7%. The unit price of the Dash is about 220 € and it’s necessary to have 1,000 Dash to hold a Masternode.
At the same time, some Masternode costs almost nothing. This is the case for example SmartCash which cost around 580€.
Moreover, the price does not provide automatically a source of confidence in terms of security and return on investment. To determine trust and ensure profitability on an investment, it is necessary to pay attention to other factors that we will address later.
The ROI or Return on Investment is defined simply by the gains obtained following an investment in a Masternode. It represents one of the fundamental factors in the choice of a Masternode.
Easy to find Masternodes exceeding 1000% ROI over a year. At the same time, with the potential profit the risk also increases. From time to time, there are some young cryptocurrencies which doesn’t have a “real” technical background.
Of course, it all depends on your investor profile. If you are looking for durability and stability, it will be necessary to invest in Masternodes such as Dash or others, like this, providing better stability for a lower ROI, with less risk.
Also known as one of the fundamental factors of choice, the cryptocurrency development team often tells us a lot about the durability of a Masternode and the trust that can be placed in it.
The stronger a team, the more likely a cryptocurrency is to last in time. To determine its strength, one must rely mainly on two criteria:
- The size of a team – for example Dash’s 60 people team-
- CVs of the team members
The number of blocked currencies and the number of Masternodes
Number of blocked currencies
It is important to pay attention to the numbers of tokens not available on the market – or blocked. The percentage of cryptocurrencies blocked is a factor of stability with regard to the price, because liquidities are lower.
On the one hand it is necessary that the number of cryptocurrencies blocked stays low otherwise it might suggest that the market is fully controlled. On the other hand if the number is small, there would be few mechanisms preventing potential falls in price.
Number of Masternodes
It is also an essential choice criteria.
The more Masternodes are on a cryptocurrency, the more generated reward will have to be shared.
In the opposite logic, if it has very few Masternodes, this marks a lack of investor confidence in this cryptocurrency.
At last, it is essential to look at the volume of a cryptocurrency on the market, when choosing a Masternode.
If trading volumes are very low, it usually means that it is not a much appreciated cryptocurrency. Despite even a sometimes dull ROI, some cryptocurrencies have a volume of exchange too light.
Here is a typical example in image:
Most of the people will stop at ROI because this is the most promising criteria when looking at Masternodes. However, it takes a multitude of factors to consider if you want to make a good investment.
It is also important to note that, depending on the type of investment you wish to make, the choice of Masternodes will be different. Some will be willing to take risks for a big gain. Others will prefer an expensive but stable and secure placement.