So, what is a Masternode?
A node (different then a masternode) can simply be understood as a computer that plays a part in ensuring the integrity of the Pivx Lite network. The Pivx Lite environment is not only decentralized but also distributed, therefore it functions best by many people running nodes located in different parts of the world. That said, you require a full node to host a copy of the Blockchain (coin’s ledger) and thus support the network.
A masternode is a full node (computer wallet) that supports the network by hosting an entire copy of the coin’s ledger in real time. In return, the masternode will receive PIVXL coins as a reward. Masternode owners receive 70% of the block reward.
Understanding how the Pivx Lite Masternode Operates
To help you understand masternodes further, let’s explore the different kinds of Blockchain in existence, and discover which one can run a masternode.
There are two common types of Blockchain out there, namely:
- POW (proof of work)
- POS (proof of stake)
Each Blockchain has its own unique mechanism through which it process transactions to enable Blockchain functions.
POW Blockchains (Bitcoin is under this category) are supported by ‘miners’. They enable transactions through ‘mining’ of Blocks that are then finally added onto the Blockchain. They attain that by use of rigs.
Think of rigs as computers that do the processing of data at very high speeds and essentially guessing answers to puzzles. The rig that gets the correct answer gets rewarded. However, the main challenge with POW is its high consumption of energy.
This has triggered a shift to POS as an alternative. POS Blockchain is supported by Masternodes. As we earlier mentioned, Masternodes are computers that enable processing of transactions within a Blockchain and in return earn a reward from the blocks created. They operate under a system that is collateral-based to guarantee the provision of services that are genuine. They act as the Blockchain network backbone or if you like, as a bonded validation system that insures the integrity and validity of all Pivx Lite transactions.
Pivx Lite is what is known as a pure POS because we use POS along with masternodes to better secure the network from attack and increase the transaction speed which is among the fastest in the industry. On top of that masternodes add an additional layer of protection and security as explained below.
Obfuscation / Coin Mixing
As the new Pivx Lite masternode code is based on PIVX, it also features obfuscation, which is done in a decentralized, independent fashion facilitated by the network of Pivx Lite masternodes. This provides an additional layer of privacy in transactions that are sent using obfuscation and sometimes referred to as “coin mixing”. While not perfectly anonymous, obfuscation via masternode mixing it is far superior to the standard Bitcoin transaction.
For example, all Bitcoin transactions are transparent and can be easily followed across the blockchain. For Pivx Lite, a nefarious actor would need to control at least 50% of the operating masternodes to have a greater than 0.5% chance of deanonymizing (uncovering the origins) a single transaction that was mixed with 8 rounds of obfuscation. This important feature provides a high-level of anonymity for Pivx Lite users that elect to obfuscate their transaction.
Swift TX is based on Dash InstantSend but better – when enabled networkwide,SwiftTX provides masternodes with locking and consensus authority for transactions. When a transaction is submitted to the network, a group of masternodes will immediately validate the transaction. If those masternodes reach consensus on the transactions validity it will be locked for later introduction into the blockchain, greatly increasing transaction speed compared to conventional systems (like Bitcoins 10 minute block times with multiple confirmation needed).
SwiftTX makes it possible for multiple transactions to take place before a block on the network is mined with the same inputs. This system is based on Dash InstantSend. Transaction time is instant with ZERO confirmation wait time.
Why run a Masternode?
Besides the coin rewards that you get from running a Masternode, here are more reasons why you should consider a Masternode:
- It increases the privacy of the transactions
- It enables instant transactions
- It allows the user to take part in the governance of Pivx Lite as well as voting on proposals
- It enables the treasury and budgeting system of Pivx Lite to be fully funded
So, how much can you make from running a Masternode?
Your own masternode enables you to earn some passive income from participating in network maintenance functions. However, there is no one-size-fits-all response on how much you can earn. Generally, it would depend on the following factors:
- The current price of Pivx Lite;
- Whether you already have a computer with a static IP address or will use a service;
- The eventual rise or declining in value of a coin into the future.
For instance, running a Masternode for Pivx Lite is likely to earn you a reward of up to 70% of the block reward. The rate of interest (ROI) of Pivxl fluctuates with several variables dependent on the activity of nodes on the network. As such, no concrete number can be given with any degree of certainty, though earning ~3% on QRK (traditionally the lowest-paying method of gaining interest) is a safe bet, with other methods a good deal higher.
How to Run a Masternode
The Hosting of a masternode requires a server with an unlimited internet bandwidth connection and static ip address. You can run you masternode at https://pecuniaplatform.io/home or at https://www.mymasternodes.host. For a Pivx Lite masternode you are required to deposit 100,000 Pivxl to start off in what is known as a collateral wallet. Once you download and integrate your wallet with the minimum amount, you are good to go and can be up and running your very own masternode in less than 10 minutes.