What exactly are Masternodes?
Masternodes are like the full nodes in the Bitcoin network, except that they must provide a particular service to the network and MUST have some sort of heavy investment in the system. To run a Masternode, one has to invest 1000 DASH.
So, now the question that one should ask is, why does a Masternode need to make that sort of an investment?
In return for their services, Masternodes get paid back in dividends on their investment. What this, in essence, does is that it incentivizes the Masternodes to work in best interests of the ecosystem. Dash was the first cryptocurrency to implement the Masternode model into its protocol.
The masternodes create a second tier network, following a Proof of service algorithm, and exists on top of the normal first tier network of miners.
This two-tier system creates a synergy between proof of service and proof of work mechanisms in the Dash network.
One a masternode is on, it is in charge of a certain set of functions like InstantSend and PrivateSend. They are also in charge of the governance.
Since running a masternode requires money and effort, in order to incentivize the node operators, they get rewarded for their efforts. The reward is usually 45% of the block reward. However, to get a more concrete answer, we will need to check out some parameters.
Reward System of the Masternodes
Since the number of Masternodes active in the DASH system keeps changing, the reward keeps fluctuating according to this formula:
(n/t)*r*b*a
So, the variables in this equation are as follows:
n is the number of Masternodes an operator controls
t is the total number of Masternodes
r is the current block reward (presently ~3.6 DASH)
b is blocks in an average day. For the Dash network this usually is 576.
a is the average Masternode payment (45% of the average block amount)
| Return on investment for running a Masternode can be calculated as: ((n/t)*r * b*a*365) / 1000 Ordering of the Masternodes Masternodes can be used to take care of important tasks in a fast and trustless way. To emphasise on the speed, one can select N pseudo random Masternodes from the network to perform tasks. These Masternodes can essentially accomplish the task without the whole network having to take part in it. This is a stark contrast from Bitcoin where every node must take part in the consensus. The pseudo random selection is done by utilizing the following algorithm. For (mastenode in masternodes) |
:)What is Dash Cryptocurrency? 8)Dash is a decentralized currency similar to Bitcoin.Dash is a digital cash you can spend anywhere, Released on 18th January 2014, Dash is formerly known as Darkcoin or Xcoin. The cryptocurrency name was changed to Darkcoin in 2015.
What is Dash Cryptocurrency? A Crash Course
Everyone who is anyone is talking about bitcoin and cryptocurrencies. However, while it is true that Bitcoin happens to be a fine example of a decentralized, peer-to-peer currency when it comes to privacy, it doesn’t really match up now does it? Along with privacy, the transaction confirmation times in Bitcoin are SO high that it is extremely impractical for day-to-day transaction purposes.
In fact, according to this graph over here:
What is Dash Cryptocurrency? A Crash Course
Image credit: Business Insider.
If you pay the lowest possible transaction fees, then you will have to wait for a median time of 13 mins for your transaction to go through.Evan Duffield realized that this was extremely problematic and thought of a solution.
Evan Duffield came across Bitcoin in 2010 and was extremely impressed by the technology, However, he was not that enthused about the slow transaction speed and the lack of privacy.
He had numerous ideas on how to make Bitcoin function better but the Bitcoin core members would never allow him to do that since that would mean changing the core’s code.
This is why, he decided to use the Core code and make his own cryptocurrency on January 18, 2014.
Dash was formerly called Xcoin which later on became “DarkCoin”. It was eventually rebranded to Dash which is a portmanteau of “Digital Cash”.
This is the team behind Dash:
What is Dash Cryptocurrency? A Crash Course
Image Credit: Dash website.
The Instamine Controversy.
Within the first two days of their launch, 1.9 million coins were mined, which ~10% of the total supply that will ever be issued. Evan Duffield said that this was because of a bug created when the Litecoin code was forked to create Dash which hampered the difficulty.
The problem was immediately resolved and Duffield proposed to solutions: