What is a Masternode?
There are several ways to make money in the cryptosphere. To begin with, you can buy and sell digital currencies for a profit through an exchange such as Coinbase, Bittrex, Cryptopia, SouthXchange, etc. Secondly, you can run a Masternode. In reality, a node is simply a computer that plays a part in ensuring the integrity of a coin network.
The crypto space is not only decentralized but also distributed; therefore it functions by several people running nodes from 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 crypto 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 crypto coins as a reward. It is a great alternative to mining.
How Guncoin Masternodes Work
Masternodes are powerful servers backed by collateral held in Guncoin, and are designed to provide advanced services and governance on the Guncoin blockchain. Guncoin has just recently added Masternodes to the Guncoin network and has patterned the Guncoin Masternodes after the Dash Masternode Model. The primary difference being that Guncoin has a much more current version of Bitcoin Core integrated with it that makes the Guncoin Masternode Network very secure and stable as well.
Masternodes host full copies of the Guncoin blockchain and provide a unique second layer of services to the Guncoin network, facilitating advanced functions such as InstantSend and PrivateSend on the Guncoin blockchain as the anonymity and instant transaction features in Guncoin are now called. The Masternodes are paid for this service, using a concept known as Proof of Service. This is in addition to the Proof of Work done by miners to secure the blockchain that has existed within Guncoin since its inception in 2014.
Masternodes must be backed by collateral denominated in Guncoin (200,000 GUN), and in return their operators receive regular payment for the services they provide to the Guncoin network. As highly committed custodians of the project, Masternode operators are given the opportunity to vote each month on up to 5% of the block reward to fund community projects supporting the Guncoin ecosystem.
Anyone can run a Guncoin Masternode. The objective is to have enough decentralization on the Guncoin Network to ensure that no single person controls a significant fraction of the Masternodes. However, to avoid bloating the network with unnecessary Masternodes or encouraging reckless operators, there is one condition that needs to be fulfilled – proof of ownership of 200,000 GUN. The coins don’t need to be in the Masternode, but they need to be kept in a certain way that is transparent to the entire network. If the owner moves or spends those coins, the Masternode stops working and payment ceases.
Masternodes are paid by the Guncoin network for the PrivateSend, InstantSend and governance services they provide. 47.5% of the block reward is paid out to the Masternodes, 47.5% to the Proof of Work miners and 5% to a developers’ fund that may be used for Guncoin upgrades/enhancements or donations to specific Second Amendment related organizations. In practice, half of the reward from a normal block goes to the PoW miner and half to the Masternode. Masternodes are selected for payment in each block (approximately every 2 minutes) from the Masternode list, and moved to the back of the list after payment. As more Masternodes are created, the duration between payments increases. If the collateral behind a Masternode is spent, or if a Masternode stops providing services to the Guncoin Network for more than an hour, it is removed from the list until normal service resumes. In this way, Masternodes are given incentive to provide efficient and reliable services to the network.
Having so many nodes holding a full copy of the Guncoin blockchain and working for the coin will be extremely useful for Guncoin. Thanks to the Guncoin reward system, there is no risk of not having enough Masternodes, and the developers can rely on them quickly deploying any new decentralized feature they want to implement as their rewards depend on it. So with this project Guncoin becomes an incentivized system of thousands of distributed servers working 24×7. This means that Guncoin can now scale more efficiently and deploy services more quickly than a blockchain run entirely by unpaid volunteers than Guncoin could in the past as a standard PoW cryptocurrency. The bottom line is that the more Guncoin Masternodes there are on the Guncoin Network, the better and safer the Guncoin Network will be. This coupled with the most current versions of Bitcoin Core, makes Guncoin one of the safest, securest and profitable coins available today.
Guncoin Masternode Benefits
Why are Masternodes important to the future of Guncoin and the Guncoin Network? Masternodes bring several very important new options to Guncoin owners and users that will help them expedite and secure their transaction provide an additonal revenue stream to them.
BLOCK REWARD SHARE
As a Masternode owner/operator, you no longer need to mine or buy Guncoin on exchanges to accumulate GUN. 47.5% of the block reward is paid out to the Masternodes, 47.5% to the Proof of Work miners and 5% to a developers’ fund (or Treasury) that may be used for Guncoin upgrades/enhancements or donations to specific Second Amendment related organizations. In practice, half of the reward from a normal block goes to the PoW miner and half to the Masternode
The “InstantSend” feature now significantly increases the speed of all Guncoin transaction. As everyone knows, Bitcoin transaction time are typically really long. In fact, the transaction time is such a problem in Bitcoin that it was recently dropped by Stripe as a mode of payment. The new Guncoin InstantSend feature solves this problem via near instant transactions.
The “PrivateSend” feature adds a new level of privacy to Guncoin transactions by adding multiple identical inputs from multiple users and then sending them to multiple outputs. Since the transaction flow cannot be traced, the privacy of the transaction is maintained. PrivateSend uses the fact that a transaction can be formed by multiple parties and made out to multiple parties to merge funds together in a way where they cannot be uncoupled thereafter.
Masternodes vs. Mining
Guncoin, like Bitcoin and most other cryptocurrencies, is based on a decentralized ledger of all transactions, known as a blockchain. This blockchain is secured through a consensus mechanism; in the case of both Guncoin and Bitcoin, the consensus mechanism is Proof of Work (PoW). Miners attempt to solve difficult problems with their specialized computers. When they solve the problem, they receive the right to add a new block to the blockchain. If all the other people running the software agree that the problem was solved correctly, the block is added to the blockchain and the miner is rewarded. This mining can be done individually or in groups called mining pools to combine more computing power.
Guncoin works a little differently from Bitcoin, however, because it has a two-tier network. The second tier is powered by Masternodes (Full Nodes), which enable financial privacy (PrivateSend) and instant transactions (InstantSend). Because this second tier is so important now to Guncoin, Masternodes are also rewarded when miners discover new blocks. The breakdown is as follows: 47.5% of the block reward goes to the miner, 47.5% goes to Masternodes, and 5% is reserved for a developer fund.
The Masternode system is referred to as Proof of Service (PoSe), since the Masternodes provide crucial services to the Guncoin Network. In fact, the entire network is overseen by the Masternodes, which have the power to reject improperly formed blocks from miners. If a miner tried to take the entire block reward for themselves, or tried to run an old version of the Guncoin software, the Masternode network would orphan that block, and it would not be added to the blockchain.
In short, Guncoin miners power the first tier, which is the basic sending and receiving of funds and prevention of double-spending. Guncoin Masternodes power the second tier, which provide the added features that make Guncoin different from many other cryptocurrencies. Just to clarify – Masternodes do not mine Guncoin, and mining computers cannot serve as Masternodes. Additionally, each Masternode is “secured” by 200,000 GUN. Those Guncoin remain under the sole control of their owner at all times, and can still be freely spent. The funds are not locked in any way. However, if the funds are moved or spent, the associated Guncoin Masternode will go offline and stop receiving rewards immediately.