MARKNetwork Education Part 6:

Difference between Masternodes & Proof of Stake (With Pros and Cons for each type)

Short summary of the article:

“Do not get left behind!”

»Still, not everyone understands how Masternodes and Proof of Stake differ. For a beginner, both are simply a passive source of income, yet there are stark differences from the existential perspective.«

MARKMining Shared Masternodes as a Service

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.

Masternodes

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.

MARKMining: Full and Shared Masternodes as a Service

Pros and Cons

Talking about the more practical scenario, let us come down to the pros and cons of the two.

Pros of Staking

  • No Coin Amount Threshold: The PoS does not demand a bare minimum amount to stake. Although more and longer one stakes, the chances of grabbing higher fees in return increases.
  • Intuitive Set-Up: Leave the wallet in an unlocked state and that is all you need to do to start staking.
  • No Offline Penalty: For being chosen as the winner and receiving stake fees in return, the wallet needs to be online and connected to the network. In case that does not happen, you only lose the opportunity to earn stakes with no impact on the age and weight of the coin.
  • Low cost set up: With just a core wallet and the selected coins, one can start staking. 

Cons of Staking

  • Security risk: Keeping the wallet online exposes it to the risk of hacks at the level of hot wallet and that too for the duration when it opens for the network.
  • Coins get locked: For the period of time you are staking, the coins get locked and cannot be sold. In case the coin price depreciates in that window, stake holder may be put to loss.
  • Orphan Blocks: Increasing number of stakers lead to the creation of orphan blocks that are not part of the main chain.
  • Unpredictable fees in return: Fee frequency when staking is lower as the competition is high impacting the predictability of fees in return for staking.

Pros of Masternodes

  • Higher and predictable fees in return: The fees in return with Masternodes are bigger in size and even the frequency is more predictable
  • Enhanced Security: Even the hot wallet can be taken offline without impacting the fees generated as Masternode hosting thrives in both hot and cold environment. 

Cons of Masternodes

  • Threshold is higher: The amount of coins required to own a Masternode is higher and it varies from coin to coin.
  • Difficulty level higher: Setting up of Masternodes is a technically deep process. Although with hosting services offered by MARKMining, it is simplified to a greater extent.
  • Going offline ends in a penalty: A Masternode must never go offline as that would attract a penalty of delayed fees in return. 

To Wrap

Weighing Proof of Staking and Masternodes on various parameters, it is evident that later comes with higher fees in return.

 

If you found this guide valuable do follow us on our social media channels to stay updated.

Get in touch with MARKNetwork Inc.

Please choose “Yes” from this select field*:
Please choose “Yes” from this select field*:
Yes

ADDRESS:

MARKNetwork Inc.

16192 Coastal Hwy

Lewes, DE 19958

United States of America

PHONE NUMBER:

+49-152-5958-1123

*MARKNetwork Inc. will use the information you provide on this form to get in touch with you. By choosing “Yes” from the select field, you agree that we may process your information in accordance with our Privacy Policy. You can change your mind at any time by contacting us at prv @ mark-network.com

© MARKNetwork Inc. 2018-2019

By continuing to use the site, you agree to the use of cookies. Further Information...

The cookie settings on this website are set to "Allow cookies" to provide the best browsing experience. If you use this website without changing the cookie settings or clicking "Accept", you agree. Further Information: PRIVACY POLICY

Close