What is a Masternode?

Masternodes are specialized nodes in a decentralized network that perform specific functions to support the network and its underlying cryptocurrency. Masternodes serve as both network validators and providers of extra services, such as instant transactions and privacy features. They play a crucial role in supporting the overall functioning of the network and are often incentivized for their participation in the form of rewards in the form of coins.

To run a masternode, an individual must meet specific requirements, such as holding a minimum amount of the cryptocurrency, having a certain level of computing power, and being able to run the masternode software 24/7. The exact requirements vary depending on the specific cryptocurrency and its network.

Masternodes are different from traditional nodes in a decentralized network as they require a significant investment, both in terms of money and technical know-how, to set up and maintain. In return, masternode operators are rewarded with a share of the block rewards generated by the network and can also earn fees for providing extra services.

One example of a cryptocurrency that uses masternodes is Dash. Dash's masternode network enables its unique governance system and provides additional services such as InstantSend and PrivateSend, which allow for instant transactions and enhanced privacy, respectively.

In conclusion, masternodes play an important role in the functioning of decentralized networks, supporting the network with specialized services and providing incentives for those who run them. They represent a new way for individuals to participate in and contribute to decentralized networks, helping to make them more secure, efficient, and user-friendly.

Simplified Example

Masternodes can be thought of as managers at a resturaunt. Imagine that there's a big restaurant where lots of people are dining, to make sure that everything runs smoothly and everyone is safe, there are a few managers. These managers are like masternodes in a decentralized network, performing special tasks to make the network run more smoothly and help keep everyone safe. And just like in the restaurant, the managers are rewarded for their efforts.

History of the Term "Masternode"

The term "masternode" gained traction in 2014 with the launch of Dash, a cryptocurrency emphasizing speed and privacy. Dash pioneered the concept to incentivize users running dedicated servers for various functions. The success of Dash and subsequent projects, like PIVX in 2016, solidified the term within the cryptocurrency community.


Dash: Dash is a cryptocurrency that uses masternodes as part of its two-tier network. Masternodes in the Dash network provide services such as InstantSend, which allows for near-instant transactions, and PrivateSend, which enhances transaction privacy.

PIVX: PIVX is a privacy-focused cryptocurrency that uses masternodes to provide extra services to its network, including the ability to send private transactions and participate in governance decisions.

Zcoin: Zcoin is a privacy-focused cryptocurrency that uses masternodes to support its privacy features, such as the ability to send transactions anonymously, as well as participating in the network's governance and voting process.

  • Decentralized Network: A network architecture that operates without a central authority or centralized point of control.

  • Validator: An agent in a blockchain network that is responsible for verifying the validity of transactions, maintaining the ledger, and ensuring consensus among users.