MARKNetwork Education Part 6:
Difference between Masternodes & Proof of Stake (With Pros and Cons for each type)
The world is divided between the Masternode and Proof of Stake enthusiasts. What is your take on the two? Before you take sides, let us explore the pros and cons.
Proof of Stake (PoS)
To curb the high energy consuming nature of Proof of Work cryptosphere moved to Proof of stake. It mirrors the process as the transactions are validated, new blocks are created and new coins are distributed. PoS has gotten rid of the cryptographic puzzle that accompanies each transaction in PoW.
Then what determines the winner? How does one earn passive income from PoS?
The creator of the next block is determined as per one’s stake in the process of Proof of Stake mining. The coins held by the user are left connected to the network. The more and longer the stake, higher are the chances of winning the stakes.
Just because Masternodes allow stakeholder earn passive income does not make it similar to PoS. In fact, they are not even close. Masternodes cannot work in silos like PoS for the creation of a new block. They act as a security blanket for the entire network at transactional level but there is more to it.
A Masternode is an extra element that provides hosting, instant transactions, private transactions, governance, and Private transactions capabilities to the blockchain network. And, this is for what the Masternodes is receiving a fee in return.
As for PoS, there is no minimum limit on the coins a user can stake but for Masternodes a minimum threshold of the number of coins is defined. Why it has garnered more traction pertains to the fact that the returns on Masternodes are more predictable.
Pros and Cons
Talking about the more practical scenario, let us come down to the pros and cons of the two.
Pros of Staking
Cons of Staking
Pros of Masternodes
Cons of Masternodes
Weighing Proof of Staking and Masternodes on various parameters, it is evident that later comes with higher fees in return.
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