Masternodes Coins
Did you hear about them? What is masternode? What adventages do they bring. Let's dig into that a little bit deeper.
What is Masternode?
Every one who is interested in cryptocurrencies should know something about nodes. Nodes are servers, which support the network, i.e. Bitcoin, where they all shares the blockchain, which is database of transactions. To secure this network, there are miners, which verify transactions on the network and build the database. This mining solves mathematical problems (finding valid hash) using huge amount of computer power, it is known as Proof of work.
Then there are another solutions, one of them is Proof of Stake (PoS). You do not need the army of graphic cards, but you need coins. Usually it works in the way, that if you have more coins, there is higher chance you will be selected for verifying current block (batch of transactions) and you will get some reward for that. If you would try to verify nonvalid block, you would be penalized and lose your coins (collateral). Then some cryptocurrencies which offer masternodes, nodes which provide these verifications plus some other stuff as securing messages, support voting for some proposals etc. These nodes usually has longer setup and need to run 24/7 and of course has higher rewards than pure PoS. Sounds interesting, right?
What about coins?
Masternodes coins! Sounds like passive income, doesn't it? I discovered them before the end of the year. Before that I didn't pay attention to them, becasue I am interested in coins which offer something promising, some features or services, I consider crypto as good investment opportunity, I am not trader.
But there is something interesting about masternodes coins. They offer to you to have a passive income, but their value depend on the current rate of the coin (and there are lot of "masternode coins"). So, you can find sites which provide overviews as masternodes.online, masternode.pro or masternodo.com where you can find interesting stats about how much they may make you rich. Is it really like that? Let's have a closer look at it.
Why should I jump in?
I am not going to tell you that, I can tell you why I decided to hop into that train. It looked like good opportunity to get some easy money. There was even exchange called coinsmarkets.com which was paradise of these coins and provided some volume, which is good if you want to trade these coins.
There was craziness about altcoins, bitcon was quite "stable" and there was chance to "discover" something new. After few days of tracking this market and a little research on bitcointalk, discord channels and other places on the internet I found interesting that there are coins with high interests, which are somehow tradeable. My criterias were ROI (Return On Investment), value of the coin, amount of coins as collateral, daily volume, available supply, available exchanges and community. Let's describe them more.
My criteria for coin
I do not claim, that it is the right and only approach, I chose that for myself, maybe you would choose different ones, but mine were these:
a) ROI - indicates how much coins on rewards you should get during one year due to the collateral (locked coins for masternode), it decreases with rising amount of masternodes, on the other hand the price should rise with higher demand (which might not be true, if sellers sell their coins in any price, especially when there is only one exchange, then it is easy to manipulate the price). Higher ROI seems better, but be careful, when it sounds too good to be true... you know that, right? :)
b) Value - some devs premined new coin or decide for ICO (wtf? ICO for masternode coins? yeah, some do that) than they can set the initial price as they want. Some dev teams are really greedy, I would be very careful with that.
c) Collateral - well, it depends on current rate to find real value of that. But some are really crazy even for new coins. Spent over 5,000 USD per masternode for unknown coin? Obviously some people are able to risk that, for me it is suspicious for new coin
d) Volume - is that coin tradeable? well, if not, I would not be able to exchange my rewards, so the coin would be useless, at least in my own eyes. So, "masternoding" the coin, which you would not be able to trade, does not make sense (i.e. ICO coins which are not listed on exchanges)
e) Exchanges - well, it is a little bit connected to the previous point. If your coin is not listed on any reliable exchange (more then one is better), than it will be hard to trade that coin. It happened after coinsmarkets "upgrade". (Since start of January, this exchange still upgrading their system, so, you are not able to cashout your coins, when dev team of the coin is not active in searching for other exchanges - I would mention for example GOA, at least what I observed). Nowadays, there is a boom of CryptoBride DEX, where you can find many masternode coins, but there is still lack of volume for some coins. For me, I was OK for example with Cryptopia and even with CryptoBridge.
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f) Community - why is that important? When you need help, you can ask for help, i.e. setting masternode, problems with updates, etc. When there is no community, there is even no value (again, my own personal opinion)
Wait a second, what about whitepaper?
Do you miss the whitepaper? Do you believe in whitepapers? Come on... Grow up :) These so-called whitepapers are like pre-election promises. Some tries to look like scientific paper, did you read some? I mean real one. I read a few papers during studies (new approaches, algorithms, etc.) Usually it takes some time to understand it properly, you need to read it more than once, similar LaTex template, etc. Most of these whitepapers for coins I read, they look like dreams of devs or crazy promises of people, who have no idea what they do, but to be fair, there are exceptions of course, too. Be careful, do not blindly believe what is written there.
What more, these coins are forks of DASH, PIVX or Zerocoin or what I consider funny, some are forks of other sh*tcoins. They are all "unique" in the same way. They offer peer-2-peer transactions (wow), anonymity (wee), untraceable transactions (whoa), etc... I guess we all know, that it is not anything special. But for fun I tried to read some whitepapers, honestly, it is waste of time. It reminds me student during exam who has no clue about the answer, but he still try to act as smart guy and talk some nonsenses. Even roadmaps might be more or less considered as jokes - everyone will implement mobile wallet during one year, finish/edit whitepaper (good point was mentioned on reddit, that someone asks if is it possible to start a coin without vision, that the whitepaper will be created in next 6 months after coin started).
But, seriously, why should I be interested?
It does not look good at all, so why should we be interested in that. The reason is what was mentioned on the start - passive income. It sounds cool. Who would not want to be paid for nothing, right? But, there are risks. Price of the coin is volatile and the price may crash to the ground, or not? Of course, it is possible. My own opinion is, that it will come for most of them, sooner or later. Let's have a look at all "ponzi" scams, altcoin faucets, clicking sites which "pay" you for viewing ads, etc. People are greedy for that, and they will spent money for that again and again, because they want to get rich easily. And yes, of course, it is speculation. I decided to try that and here is the result after 2 months.
My experince
So, after I sold my Verges after McAfee hype, I decided to start with Tokugawa - TOK (at the time for 0.9 USD) and SagaCoin - SAGA (2.3 USD), they were relatively cheap, with high ROI and they were listed on stable exchange - Cryptopia).
Setting was quite easy, but I had to find some info about it, for common IT guy it is not problem to do that (in short, find VPS and usually set masternode with guide (usually pdf), which is very similar or even the same for these coins, some devs even forget to change the name for their coin, or amount for collateral in the guide, i.e. Tokugawa - Gainer). There was soon a big boom of altcoins when TOK got over 7 USD and SAGA over 22 USD. And to answer your question... yes, I missed that and HODLing. But rewards were generated, rewards were high and everything was OK. Before the dip of altcoins came I found coin called Gainer. It started with ICO, there were rumors the dev is the same as for Tokugawa, which was not good for me, since it meant that there will be no future development for TOK (well, it was not since the realease even before, but now... even hope died). So, I decided to get rid of that sh*t at 4.4 USD (as I understood after that, market is not rational, but retarded, even after these rumors which were confrimed even by dev itself, its price went day after to 6 USD but then during I guess 4 days fell to 2-3 USD)
I started looking for anything which would replace my missing masternode. I found 3 candidates: CrowdCoin, Phills Currency and Syndicate. CrowdCoin was strong in community (in my eyes) and their "marketing" looked well, because they are quite active on twitter. But nothing more and at that time, it was overpriced, around 20 USD.
Phills looked nice, in short, it should be a coin for developers, but they did not have any exchange and volume, when they joined to CryptoBridge, it was overpriced (around 1 USD) and its attractiveness disappeared.
Then there was Syndicate. Coin which is listed on Bitterx and Upbit. I found some info, that it should be reborn with new team (sounds good) and some exciting announcements should be revealed (actually not that much), and its price was around 0.7 USD. So, I found the winner, Syndicate. Setting up mastenode was quite OK and it is run well. Price is quite stable and there is place where to trade coins (Bittrex is really strog argument for this).
After some time, I spotted that there is some SmartCash, it is in Top 100 and it is not on any bigger exchange. It has volume and interesting community. So, it was my third and last try so far. It was I guess the easiest setup of masternode (they call that smartnode) thanks to their setup guide, which is really well written with great description. But there were some issues with wallet and some people had troubles that they masternodes just stopped working. They still work on updates and improvements, since that project is quite young, it is expectable there will be some issues.
Brief review of coins I tried
So, what is my result? Surprisingly, I ended in green numbers after 2 months (of course, because of selling TOK and big rewards from SAGA). And what is my felling about masternode coins now? Let's sumarize what I noticed. If you do some research, get some info, you can avoid the failure and you are able to generate some profit. It is very important to stay informed and follow usual channels as twitter, discord, etc. You can find some stats about rewards on sites mentioned earlier (masternodes.online, masternode.pro, masternodo.com). I provide my stats, you can compare them with stats from these overview websites:
Tokugawa - ICO coin with no active development and nice ROI. It is purely pump and dump coin with nothing special. Average reward per day was around 22 coins (one reward has fixed value of 11.2 coins).
SagaCoin - coin without big promises, dev team release updates which fixes some minor bugs, lets see what their whitepaper will bring. Average reward per day is around 25 coins, rewards are random, so you can get as one reward 44 coins or 0.3, it depends how much good luck you will have
Syndicate - quite stable coin, listed on big exchanges, so there is no problem to trade rewards. Average reward is around 12 coins per day (one reward has fixed value of 5 coins)
SmartCash - zerocoin fork based on community, now a little buggy, but with big plans for future, might be successful as dogecoin was. Average reward per day is around 31 coins (one rewards has value of 220 coins).
Conclusion
"Do not invest more than what you can not afford to loose." It is very good rule. There is a huge risk, but if you know what you are doing, you can minimize that risk and earn something. If you do not want to spent 1-2 hours per day to watch news and follow social media, but want to enjoy your life instead, I would suggest to choose more serious coins, but what can I now, right? Everyone should do what they consider the best for them, everyone has own brain and people should be able to decide by themselves. I hope it was good introduction for you, and you will do your own research to decide if it will worth for it or not.