Masternodes are servers that helps a blockchain to secure and verify transactions. It keeps a full version of the blockchain and updates in realtime and by doing this (helping the stability of the blockchain) it gets rewards.
Just like mining a masternode secures and verifies transactions for a coin and/or token. Masternodes have introduced themselves when the "proof of stake" algorithm was introduced. Proof of stake differs from mining in the sense that your coins are the collatoral rather than the hardware. In a Proof of Stake based cryptocurrency the creator of the next block is chosen via various combinations of random selection and wealth or age.
In other words, when you own a hefty amount of coins your weight (and chance) in a Proof of Stake algorithm increases significantly. Everytime a node mints or forges a new block, the coins are reset regarding their age and have to age an X amount of time (for Hyperstake, for example, this is 8 days).
The Proof of Stake algorithm has two approaches:
- Staking alone
- No startup time.
- Flexible (doesn't have to be online all the time).
- Staking as a masternode
- Better rewards.
- Ability to vote on proposals.
- Can be hosted away from your wallet.
At Goldnode we're focussing on staking as a masternode because it has better rewards. The downside of running a masternode is that it has a very high entry point (which increases when the market price of the coin increases) in terms of coins and, in some cases, in terms of hardware.
This is the reason why we want to offer a platform for people to have a lower entry to participate in a masternode and get a slice of the revenue a masternode generates without having the hassle of maintaining the hardware.