Part 2 –
Masternodes: Where do I start, and what is that?
Okay, we left off with some basic tips that you should use to evaluate or choose masternodes:
- Research In-Depth, Including:
- Review Stats (Collateral, ROI, etc.)
- Stalk the Team/Devs
- Review Project Documentation (Whitepaper, Roadmap, etc.)
Now that you’ve found a project that you’d like to support, you’ll need to setup a masternode! It might seems a little daunting at first (especially for those with no coding knowledge), I promise it’s not that bad. If I can do it, I know you can too 🙂
Hosting a masternode:
There are lots of sites that are available to host a masternode. Companies lease servers to end users that need computing power, CPU + RAM. How it works – for a minimal, monthly fee (usually $5), the server interacts with the blockchain. Additionally, the server sends your rewards to your personal crypto wallet located on your PC. This is referred to as a ‘hot/cold’ setup. Hot (running all the time, connected to the internet) and cold (segregated masternode operations).
Now you might be asking yourself why you need to pay +$5/mo. when your computer has lots of spare computing power. My answer is: well…you can; however, this method leaves your wallet vulnerable to security deficiencies. So, to reduce the chances of someone hacking your wallet, I recommend the hot/cold setup rather than running the masternode locally on your computer (‘hot’ setup). Plus what’s $5 when you’ll be pulling in $100s/mo.? The most popular choices are vultr and DigitalOcean. I personally use DigitalOcean and would appreciate if you use my link to sign up (referral link).
There are lots of online references to get started, but you’ll need to pick the minimum computing specification as set by the developers. This piece of information can very quickly be found by asking in the project discord or telegram.
Next, you’ll need a program to interface with the server from your computer. I recommend PuTTY, it’s a basic command prompt that you’ll use to enter installation and operating commands/scripts. There’s also lots of online references to run PuTTY, but TRB crypto solutions also offers masternode setup for a minimal fee.
Armed with your server and PuTTY installed, head to the crypto project website for specific instructions to install your local + server wallet and code for your mn operation.
OMG, my first masternode is running! – what now?
Sit back and relax!
Most masternodes have a minimum operating period before your first payout, so be patient.
With your hot/cold setup, you don’t need to leave your computer running or anything. Just check on your wallet every couple of days to make sure the status has not changed from ‘ENABLED’. If you see a status like ‘WATCHDOG/SENTINEL…’, head to the online groups for technical support (or TRB).
Do keep up with the project in discord/telegram for possible coin swaps or wallet updates. As developers improve upon the project, the masternode may change so keep a watchful eye.
Also, watch for changes in ROI. You’ll notice that with a new coin the return on investment is very high, something like +1000%. This is usually due to the small number of operating masternodes. As more mns are setup, the ROI decreases since a fixed reward is divided over more mn operators. As the ROI decreases, your masternode may become less attractive to investors…
For this reason, an exit strategy should also be considered.