In Wake of ASIC War, ‘Masternode’ Technology Is Lurking In The Shadows
The crypto community has been in outrage for many months after Chinese ASIC manufacturer, Bitmain, announced that it would be accepting orders for the Antminer X3, a $12,000 ASIC that was specifically designed to mine Monero and other cryptocurrencies running the same algorithms.
Consequently, companies are restructuring and reshaping their internal protocols and blockchain algorithims to avoid falling “victim” to ploys through the apparent monopolization of the crypto-mining space. This makes crypto-mining seem less attractive, does it not?
Welcome to masternode technology. A ‘masternode’ is a cryptocurrency full node or computer wallet that manages and stores a complete copy of the blockchain, in real-time. Functioning separately than that of normal nodes, masternodes do more than just store the full blockchain and relay transactions. Before I go any further, it’s important to understand a little bit more about blockchain.
If you’re reading this article, at some point, you probably have come across an individual(s) who claim they are “blockchain experts.” What you need to know is that this is nothing more than a sales tactic that consultants use to try and get you to invest in this space that both you and they do not understand. In fact, there is no such thing as a “blockchain expert.” Why? It’s no different than a lawyer claiming they are an expert in law. There are too many areas of the law, and no single person can claim expertise in every area of law at once. Same logic with blockchain technology.
Which Blockchain and Which Part?
Anytime someone claims to be a “blockchain expert”, it’s important to follow-up and ask the individual(s) which blockchain they are claiming expertise in, and adding onto that, which part of the blockchain? There are hundreds of thousands of blockchains out there. One cannot possible claim expertise over all of them.
Blockchains can be separated into three categories The most common category of blockchain is the PoW, or proof-of-work. Bitcoin is the best example of this utilization. The other two categories are PoS, or proof-of-stake, and a combination of both PoW and PoS.
The PoW blockchain comprise of miners who process transactions by mining blocks, which are eventually added into the blockchain. This involves a guessing game of computers processing data at very high rates in order to guess the answers to these puzzles. The first mining rig or operation to guess the answer wins the right to mine that particular block. Once a block is mined, that miner is rewarded in Bitcoin or another form of cryptocurrency.
The problem as the community is starting to see, is that this process requires an enormous amount of energy and money. The crypto-community would attest that the major issue in this “ASIC” war involving Bitmain, involves the continued utilization of the PoW protocol.
While PoW is still being used, most notably by Bitcoin, there is talk about the benefits of shifting over to PoS. We will have to wait and see whether or not PoS is indeed the next best blockchain when it comes to holding the front against the monopolization of the mining space.
Why Should Investors Turn Their Eyes To PoS and Masternodes?
Proof-of-stake, or “PoS”, is an energy-efficient alternative to the PoW protocol for mining cryptocurrencies. Instead of mining cryptocurrencies through hardware, they are created and mined by holding a significant amount in a staking wallet. In other words, the more coins a miner holds, the more likely the wallet will solve the next block in the puzzle, providing for a bigger reward for the holder.
The incentives that stem from masternode technology is extremely attractive to crypto-investors. Different cryptocurrencies have different incentive models. With masternodes, comes the potential to earn a decent monthly or weekly income, or passive income.
A ‘masternode, or “MN”, is a server(s) that sit(s) on a decentralized network that stores a complete copy of the blockchain. Unlike ordinary nodes that are limited by their designated function, masternodes are able to accomplish much more—providing for direct, instant transactions, voting and governance protocol voting, and verification.
In this system, it costs a significant amount of money in order to run. Consequently, this deters masternode operators from attempting to cheat or circumnavigate the system, as they would have a personal stake in its entire operation. Playing devil’s advocate, in the event they did attempt to circumnavigate, they would be punished through the devaluation of their own HODLings.
GoByte Exploring Masternode Tech
One company, GoByte, is exploring this masternode technology. GoByte allows users to earn money simply for work done around the wallet, without using the computing power from computers.
As mentioned earlier, no expensive mining farm needs to be purchased to conduct operations. Instead, a personal computer or laptop will suffice, avoiding high costs of energy bills, burned motherboards, and even local noise complaints. What’s not to like?
When it comes to the amount needed to invest in a masternode, that depends upon the cryptocurrency. For each currency, the deposit amount differs, and can reach significantly large amounts.
The first masternode, DASH, now valued at approximately $304.00, requires the prospective owner to block 1000 DASH, which is more than $300,000 USD in the wallet. But, that masternode brings the owner approximately $2,000 of additional income a month. You weigh the benefits.
So, back to GoByte. The GoByte Pay platform acts as a payment system, including a wallet and potential for business transaction processing. Unlike services like PayPal, the module isn’t able to process payments or transactions, but instead confirms these transactions through the blockchain via masternodes and miners.
Bringing Businesses Into The Loop
GoByte devs are also planning to launch the very first POS-terminal for business with the possibility of cryptocurrency payments. These terminals based on Android OS will generate QR codes and new GoByte addresses directly inside the Pay module and will be able to accept, reject transactions and print receipts. Moreover, the terminals will also include readers for the GoByte Pay cryptocurrency cards, which allow cashing out cryptocurrency and making transfers to bank accounts.
If you have one take-away from this article, it’s that cryptocurrency mining is too expensive and becoming a financial risk for the average user. Maybe this transition into PoS and masternode technology could provide a more efficient and secure means of mining and engaging in crypto-transactions.
Andrew is a Forbes Contributor, former contributor for The Merkle, former Huff Post contributor. He also works as a consultant for ABC, CBS, FOX and NBC across Dallas and Ohio on the latest news in the technology law realm. He has been quoted in many Forbes articles and featured in national stories across the countries such as Cheddar on GDPR, and on podcasts such as Lawyer 2 Lawyer, Thinking Like A Lawyer, TheLegalTool Kit, and This Week In The Law.