In cryptosphere, blockchains need timely validation and maintenance which could be performed through different methods. Most of these methods act as probable actions to earn rewards by assisting with the blockchain security and mechanism. You can Precursor Towards Earning Crypto Passive Income. The main aspect of the blockchain technology is to maintain a digital, decentralized and distributed ledger. Have you ever thought of how these records and transactions are being recorded to the distributed public ledger, or its operation, who is in-charge of verifying transactions and ensuring that there is no untrue data annexed to the blockchain. This is the place where consensus mechanism comes into form which binds the entire network and verifies whether the information being recorded on the public ledger is valid or not.
With all the cryptocurrencies operating on varying consensus mechanisms, Proof-of-Work (PoW) is one such known method wherein the miners earn (monetary reward) by solving the next hefty puzzle fastest. Proof-of-Work has been the most widely used method for validating blockchains, but it involves abnormal usage of energy to internalize and solve the hash puzzles.
To combat this cause, more and more cryptocurrencies are now implementing Proof-of-Stake.
Masternodes (PoSe), on the other hand provide advanced services and governance on the platform. Running a masternode is a form of staking which is more difficult to reach. Masternode is a combination of staking wallet and a server that derives blockchain network.
What is Proof-Of-Stake?
Proof-Of-Stake is a concept where mining and validating block transactions depends upon the person’s current stake in digital assets. The more tokens you hold, the more you can mine. While you mine, you will be rewarded with more of the tokens. For this, you just need to set up a wallet on your PC and keep it open and connected to the network 24/7. Proof of stake is similar to Proof of Work
What is a Masternode?
A masternode is a server that derives a blockchain network. Masternodes provide advanced services and governance on the blockchain network. These are created by community members who are known to have fulfilled a certain criteria. To operate a masternode, one needs to put up a specified amount of tokens in their wallet which vary from blockchain to blockchain. Dash is the first ever cryptocoin to introduce masternodes. Masternodes, instead of staking coins and securing network provides extra services such as hosting and maintaining entire blockchain. Hence, it comes under Proof-of-Service (PoSe)
To attain a difference between the two emerging mechanisms of blockchain implementation, we take a closer look at the pros and cons of these mechanisms.
Staking Vs. Master nodes
With the large number of Proof of Stake and master node coins pertaining, comes the advantages and disadvantages of each. You can go through the following inputs, while you are deciding about any coin to stake that consists of both master node and staking feature.
|Start staking, All you need to do is unlock a wallet and leave it open 24*7.
Here, you go!
No minimum amount of coins needed to stake.
Coinage and weight are not affected even if the wallet goes offline.
User-friendly and cost- effective.
|Requires hot wallet which needs to remain unlocked.
Low rewards due to high competition.
|Stake here, and you’ll get more and bigger reward amounts.
Masternodes are usually hosted in hot/cold environment. (taking wallet offline may even cause no harm)
Frequency of distribution of rewards is predictable.
|Requires fixed amount as collateral which is usually large and unaffordable.
Setting up of masternodes is quite difficult.
Involves an operating cost for being run.
Both staking and master nodes have varying deliverable in terms of their advantages and disadvantages. This set of pros and cons will help you to know which side are you on!