It depends on whether you believe in blockchain technology and the proof of stake consensus mechanism. I truly believe proof of stake will be the major consensus algorithm used by most of the altcoins on their blockchain network in the coming years.
If you are reading this article, I am taking a little bit of liberty to assume that you are aware of the pros and cons of blockchain technology and would not cover them in detail in this article. Some of the exciting features of blockchain technology that have caused the rise in crypto tokens are immutability, decentralization, enhanced security, and faster settlement through consensus.
In this article, let us talk about decentralization and consensus. Since blockchain is decentralized, there is a need for validation/verification of the incoming transactions (there is no central authority to verify like in banks). The incoming transactions are grouped as a block and are verified through a consensus mechanism through the independent nodes interacting with the blockchain before adding the block to the chain. Today, verification of the transactions is done through 2 consensus algorithms - proof of work and proof of stake.
Before we go further, let us lay down the basic terminology. Node is a computer that is used to verify transactions. The person who uses a node to verify transactions on a blockchain is either called a miner (proof of work) or validator (proof of stake)
Proof of Work
This mechanism is currently being used by Bitcoin and Ethereum. In this mechanism, a block of transactions coming in is added to the chain once a node attached to the blockchain can verify the hash required by the blockchain. This process of verification is called mining and the miner who successfully computes the hash is rewarded with the underlying token( bitcoin or Ethereum). However, the process of computing hash is very CPU intensive and consumes a lot of power. Also, since, there are only about 3-5 million left to be mined in bitcoin, the process may not be rewarding going further
Proof of Stake
This mechanism is used by most of altcoins to overcome the power issue. In this mechanism, the probability of a validator receiving the opportunity to validate a block of transactions depends on the number of altcoins staked (holding the coins) and the period these tokens are staked. There are also extreme penalty measures in place if they fail to verify the transaction successfully such as losing the coins staked.
With proof of stake, new opportunities are created through delegation. As mentioned earlier, One needs to have a decent number of coins to become a validator. However, a common man like me can stake my coins out to the validators for fixed interest. This is called staking and has become one of the best ways to create passive income.
What is a MasterNode
Master nodes are special nodes that stake a huge number of coins to get verification rights for a particular blockchain. As they stake a large number of coins, they are given special. A node is qualified to become a master node based on the following criteria
Number of coins held (Stake)
Age of coins held •
Last confirmed and remunerated block •
Online time and number of servers
First and foremost, a master node, like any other full node, is a node server within a network. Full nodes are important because they process transactions and store them in the blockchain. In addition, however, a master node has tasks and rights that a normal full node does not have:
Processing of anonymous and confidential transactions
Execute Immediate Transactions
decision-making and voting rights
Basically, everyone can operate one or more master nodes by himself. However, this entails several problems and risks and the time required should not be underestimated. The operation of master nodes requires not only some capital but also technical know-how and experience with the blockchain network and the master node cryptocurrencies. In addition, one must deal with the companies behind the masternode cryptocurrencies, evaluate their business model and future opportunities and weigh the risk against the possible return. This often requires very quick decisions.
As per masternodesonline, the yield ranges from 2% to well over 20,000% based on the respective master node coin. Since the master node Coins are very volatile and sometimes have no trading volume or only a small market capitalization, a yield of several thousand percent can also be worthless. The capital required to deposit the coin (stake) is also very different: the cheapest master nodes are already available for less than one US dollar, and the most expensive and dominant master node from DASH requires an investment of more than 70,000 US dollars. However, this investment (Stake Coins) is only blocked and unlike the investment in mining, not lost. A master node can be dissolved daily, whereby the tokens become free again and can be changed into Fiat money (EUR, USD, etc.). One possible risk here is price losses, which can of course also lead to price gains.
To avoid the volatility caused by independent master node coins, it is advantageous to run a master node pool that requires a lot of capital like Yield Nodes. The main advantage of a pool is the ability to invest in a wide variety of master nodes through a larger capital base (diversification). Such diversification with different master nodes from different risk classes ensures greater security and stability in earnings. The larger such a pool is, the better the analysis is in the respective coins. Permanently available professional administrators can react faster to short-term chances in connection with crypto market experts. New master nodes can be set up more efficiently and the costs for electricity and server use are usually lower due to the use of commercial tariffs. This significantly increases the potential yield. Since the risk is significantly reduced by the administration and monitoring of specialists and crypto market insiders, a total loss is almost impossible. In addition, pool members need to spend significantly less time and have a more even payout.
In summary, some of the advantages of running a master node pool are
Lower risk through diversification
Low expenditure of time
More even predictable disbursement
Special knowledge available
Higher yield
Yield Nodes
YieldNodes is a master node pool managed by a dedicated group of experts led by German Urs Schwinger who has extensive experience in programming, computer networking, online commerce and online marketing. As early as 1999, he operated an online portal using his own technology and software with one million page impressions per day. (12sms) Since 2014 he has been working with Blockchain technology. He had a larger mining farm in Ukraine, where he lived for nine years. Since 2017 he worked on Ethereum and the programming of Dapps (Decentralized Applications) and Smart Contracts. He developed a new public offering standard, the RTO (Regulated Token Offering) as a real economic alternative to ICO, STO, IEO, and IPO. The Project As a response to many requests to act as a consultant, participation requests for mining, and master node Staking, Urs Schwinger launched the Yieldnodes.com project in 2018. This project is intended to split the complex topic into many individual areas and to show the participants the possibilities of how blockchain technology can generate different types of revenues without falling into speculation. Private individuals and companies are equally addressed. The project is to finance itself from the outset and thus demonstrate the pragmatic use of the technology.
Why I like YieldNodes
I have been hearing about Master Nodes for a while and in recent times, there has also been an explosive growth of NaaS (Node as a service) such as StrongBlock and DaaS (DeFi as a service) applications such as CronosNodes. However, I like YieldNodes for the following reasons.
In recent times, due to the market crash, most of the coins have lost value (up to 50%). It is refreshing to see Yield Nodes operating in Euros rather than in cryptos. It is one of the applications where you get exposure to master nodes without owning a single crypto token. Also, their returns have been greater than owning a bitcoin
They have been in this business since 2018 and share 85% of their returns with the investors. They have a proven track record
They are very transparent about their returns on the weekly basis. It is displayed on their website at the end of the week.
Love the management team led by Urs Schwinger. They are very confident about their business model. They promise to return your capital if they are not able to generate returns greater than 5.5% per month.
Love average of 7–10% returns per month which can double the capital in less than a year if compounded
Many NaaS applications generate higher yields but I personally like YieldNodes as there is no crypto token involved and the business model has been proven for the past 3 years ( Most of the apps in the crypto space disappear in a year) to generate consistent returns of 7-10% per month.
How to Get Started
Click on the YieldNodes link to get started. It is my affiliate link and I get paid 5% of the amount you invest. You would also get an affiliate link once you get started.
Fill out your personal information and verify yourself and your address with identification and proof of address. One cannot withdraw until this information is provided
Set up your multi factor authentication along with any other settings as needed.
You can deposit your money in BTC (bitcoin) or USDT TRC20. There are also some third-party services to convert Fiat Money to Bitcoin. I have not used them personally. Check it out
Depending on your choice, you will be provided a wallet address where you can deposit your crypto. The crypto deposited will be converted to Euros. It takes up to 7 days for your money to be used for master node pools.
One thing to note, your deposit will be locked for 6 months. You cannot withdraw your initial deposit. It is recommended to deposit amount that you do not need in near future.
The payments are made on 8th of each month. You have the option to either withdraw or add it back to be used for master node pools.
Takeaways
I was very excited but also very nervous about investing a large amount. I invested 5k in Mid March via bitcoin. on April 8th, I received a bonus of 220 Euros which was pro-rated as my investment was for less than a month. I had compounded it back. Now, I am planning to invest more as I accumulate more cash from other investments. Will keep you posted about the returns I generate in this investment in the future.
Some of the information in this post is from YieldNodes white paper. Do check this investment out and let me know your thoughts. Wish you profitable investing!!.
To know more about our other investments generating passive income, click here.
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