Today we will talk about masternode : what it is, how profitable it can be and compare it to traditional mining.Mining in the classical sense of it (POW) is buying Asic / gpu, choosing a pool, spending on electricity and the joy of being able to spit on the ceiling and count money. (Of course, with proper payback)
Mining is a fairly profitable business, but for farms or dozens of ASICs one needs a place, a good cooling system and soundproofing. In this case, the owner can perfectly organize the process of selecting solutions to tasks to add a new block to the block and get his reward.
But, for example, the same mining with the help of master (POS) can be more profitable than the classical mining "on iron”.
We will not go into the technical aspects of POS and POW mining. It's boring. Just briefly tell you about the masterpiece (Masternode).
Some coins use master masternodes in their work. These are special nodes that support work, increase the speed of transactions, and also ensure the operation of user functions and decentralization.
And such a node for providing the network of blockchain chosen by us, we can put ourselves and receive a reward for it.
Mining with mastering does not require serious computing power, but you do not need to own coins.
We earn by installing the nodes of Masternode for servicing and supporting the operation of certain BlockChain networks.
Since no special equipment is required for such a profit, you can run the node for mining in the cloud, for example, using AWS, or a virtual server, that for a small fee will put a stable operation and connection to the network.
And as already wrote - buy a certain number of coins and freeze them on your wallet.
What happens after?
To stimulate the creation of a master network, the network rewards their work and "pays" holders of master codes with coins of the network. The situation resembles the usual mining: for each new block, "born" by the network, the master craftsmen receive a certain reward in coins of the network.
It means you get money for keeping money on your wallet.
So, the masternode is a node in the crypto-currency network. Usually this is a server or just a computer with a static ip-address, with a launched crypto currency wallet, which has full synchronization with the blockchain and works in 24/7 mode, with which we receive a profit.
Because of their great capabilities, such network nodes usually require significant investments to raise the Masternode. But these investments are less than the purchase of equipment for mining, which at the moment has a disputable yield.
How much can it be profitable? A lot of, but directly depends on the selected coin, an average of 10% per month and higher. There are master classes and adored shit-coins with a payback of up to 400% per month.
Of course, there are risks in this topic. Actually, as in any business that brings income. But all the risks are reduced to:
Malfunction of cloud service (Virtual Server)
Change in the price of coins for the selected crypto currency.
As we remember, Pow-Mining on farms (asic / gpu), Pos - holding the N-th number of coins on the wallet (Masternode). What to choose?
The effect of mining on the cost of crypto currency.
For completeness, we will carry out a general analysis of what leads to the connection of new miners to the network:
When new miners are connected to the pow-network, there is a general increase in its computing power, which has a direct effect in the form of a decrease in the profitability of mining. In simple words, if, say, 1,000 coins in a year were distributed between 1000 miners, then with the arrival of hundreds more, each miner will earn on average fewer coins than before. However, increasing network nodes increases its stability, which indirectly affects the growth of trust in the network, increases its attractiveness and, accordingly, the price. In addition, today you can buy iron for mining for bitcoins, thereby stimulating demand for crypto currency and increasing the volume of trades. Proceeding from this, it can be concluded that the decrease in the profitability of mining (that is, in unit of time we get fewer coins than before) is partially offset by an increase in its value. For a more accurate assessment, obviously, a full study should be conducted.
What happens when the master is started in the pos-network? First, it increases the stability of the network and, consequently, its value as an infrastructure for conducting transactions. Secondly, because for the start of the master class more than 95% of the cost is the purchase of the required number of coins, the demand for this crypto currency is artificially increased. Moreover, since for the continuous work of the masterwork it is required that the coins are frozen in the masterwork (they did not participate in the transactions), the total number of coins being circulated in the network is artificially limited, ie, a deficit of coins is created on the market, which causes the growth of the value of the crypto currency. Estimating the increase in the number of master classes in the Dash network, it can be seen that the coins that were purchased and "frozen" were significantly larger than the newly minted coins, i. on the face of obvious currency deflation even when issuing coins. This phenomenon can be observed only in pos-networks.
I note that in hybrid networks, such as Dash, Zcoin, Decred, ZenCash, pow-mining creates inflation, which is extinguished by the deflation of pos-mining. Depending on the reward system, it is possible to assess which side is skewed.
Generalized calculations
For comparison, take two popular currencies: Bitcoin and Dash. We will calculate the yield for the period from January 10, 2017 to January 10, 2018, in USD and BTC. In accordance with the data from coinmarketcap.com at the time of purchase we have:
Master of Dash - 12260 USD, 13.4365 BTC.
For the same amount, you could purchase 13.4365 AntMiner S9 with a total hash of 188 111 000 Mhash / sec.
After a year of work on the master Dash there will be about 1200 coins, which in accordance with the current prices will be ~ $ 1,274,244 or ~ 90.3844 BTC taking into account the growth of the value of crypto currency and coins. If the cost of Dash for bitcoin remained unchanged, we would have ~ 16.1238 BTC or ~ 227 119 $ on the master log account.
For simplicity, we will calculate the average hashrate of the bitcoin network during the period under review- 9 204.55 Ph / sec (data for calculation), then we would receive about 0.0596 BTC per day and eventually would loot 21.754 BTC or 306 426 $, if we take into account that we would be able to sell our iron at a price of 1 BTCBTC, we would have received about 35.1905 BTC or 495 693 $. These figures are very approximate, because Overhead maintenance costs are excluded with the exception of the cost of electricity in 0.1 $ / kWh.
It is important to understand that this is a very very conditional calculation to justify general conclusions.
conclusions
Against the backdrop of the growing market of altcoins, as well as taking into account the risk assessment and the impact of adding new miners to the network and estimating calculations, it follows that pos-mining is much more flexible and profitable (90.3844 BTC versus 35.1905 BTC).
However, note that if the crypto currency does not grow in price, then pow-mining may be twice as profitable (16.1238 BTC vs 35.1905 BTC).
Finally, I would like to add that there is a huge amount of crypto-currency for pow-mining and some for pos, so for an evaluation of the most profitable investment it is necessary to conduct a deep and detailed analysis of specific crypto-currencies.
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