What In The World Is A Node Operator And How Can It Improve My Investment Portfolio?

By Perry Woodin, Founder of Node40

In a time where “internet money” is no longer a fad, or used solely by a secret community of computer scientists, people are discovering alternative ways to invest. In a crypto community accelerated by wild volatility, many newcomers are seeking alternative, passive revenue that’s safe and requires minimal effort to earn.

We are all used to the traditional ways of investing, ways our parents and their parents swore by - like property, the stock market, and savings accounts. Property is never a bad choice; my father used to tell me, “there is always money in bricks and mortar, son,” but even real estate comes with risks. As a property owner, I get lumped with certain utility bills, school taxes, and property taxes, while also having to worry about how my tenants are treating a pricy asset that I poured everything into, or whether or not they’ll make rent before my mortgage payment comes due. I also worry about another housing market crash, a real and existential threat to the economy.

The stock markets remain another choice, often with better returns. But to capitalise on the wildly fluctuating share prices, you either need psychic powers of prediction or paid-for help to achieve “alpha.” With digital currencies, investing in a new “cryptocoin” just might make for a better payout –– but it comes fraught with risk and, typically, gigantic volatility, not for the faint of heart.

Less than two years ago, I saw an opportunity that has become my business, something that leverages the rapid rise of cryptocurrencies while remaining steady at the same time. It’s called “Masternode Hosting,” and it’s a new concept that just might be an answer for some others out there, too.

The evolution in fintech over the last decade has paved the way for the migration to decentralized financial management, the rise of cryptocurrency, and the blockchain: a distributed ledger that even the biggest banks are clamoring to adopt. Blockchain underpins the functionality of cryptocurrency, which has been around since Bitcoin was invented by the pseudonymous Satoshi Nakamoto in 2009.

However, another virtual currency, called Dash, has begun to share the spotlight. Currently the 7th most valuable digital currency, Dash boasts a market cap of $80 million USD, a figure which has quintupled from this time last year. It’s a “better bitcoin” designed and backed by world class developers, who are working overtime from nearly every time zone to develop an evolved digital payments system that could rival Apple Pay and Paypal, among others.

One of Dash’s prime characteristics is how it’s structured, with a governance system consisting of “miners” and “masternodes,” both of whom play a part in guaranteeing transactions are rapid, robust, and always true. In exchange for providing governance services, participants are actually rewarded with brand new cryptocurrency on a regular basis.

So what in the world is Masternode Hosting? Well, in its simplest form, it’s the function of maintaining the viability and efficiency of servers within the Dash network. There’s around 4,000 masternodes – servers with a specific job – spread across the world that verify transactions at substantially quicker rates than the bitcoin network, while distributing mining rewards. Masternodes can be hosted by groups, individuals, or companies.

Together, they ensure the Dash network performs at its peak, increasing the whole network’s stability and providing enhanced value to owners and traders alike. In return for providing the network with this capability, the Dash blockchain autonomously pays out rewards to Masternode owners on a regular basis.

The best-rewarded masternodes are those that are always online, so hosts which provide guaranteed uptime are guaranteed to be paid with clockwork regularity. After all, failure to keep a masternode uninterrupted, 24/7, can result in missed payments to the customer. On occasions where a masternode is offline and results in a missed payment, a good masternode operator should compensate the customer immediately.

Beyond providing the network with certain technical abilities, each masternode acts as a representative in the “Congress of Dash;” owners get to actually vote on various proposals for how the Dash budget should be spent. Good masternode hosts can provide push-button access to these proposals, as well as provide first-class customer support. But if masternodes are to be seen as an investment, the necessary tools need to be available for judging the performance of such an asset.

To that end, at Node40 we’ve built a powerful suite of tools that lets owners track their gains the way they would in a traditional investment portfolio. The Masternode Portfolio Insight illustrates with precision how each Node has performed, fully tracked against the United States Dollar on a monthly, quarterly and annual basis. And just as any investment is taxable, we offer a solution for the thorniest of issues: an estimated calculation of earnings that can be helpful for end-of-year taxes. These reports, which provide a layperson’s view of realized and unrealized value fluctuation pegged to a fiat currency, is a game changer in the space.

Blockchain is clearly the future of investment, but to make them work the way they are intended, projects need to be well governed, and individuals contributing to the stability, growth and efficiency of the project need to be incentivized. Its because of this, we started what we did, and owning a Dash masternode will add investment portfolio diversity and a secure stream of revenue. Whether it be a struggling retiree trying to pay the bills, a tech savvy college kid working his way out of student debt, or a millionaire with limited time on his hands, we’re proud to have helped them all.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Perry Woodin

Perry Woodin has been designing and developing web applications since 1995 and first entered the cryptocurrency scene in late 2012. With an ever expanding interest in the economics of trustless systems, Perry started evaluating the numerous cryptocurrencies being released into the marketplace and decided to invest in Dash and become a Foundation member. In January 2015, Perry teamed up with Sean Ryan to lay the foundation for starting Node40 as a way to automate incentivized infrastructure services and provide financial insight for customers. Prior to Node40, Perry accumulated over 20 years experience developing and managing web-based applications. He worked as a consultant and was responsible for the development and management of customized metrics for business applications, including running one of the first web-based applications (GalleryDriver) that allowed high-end art galleries to manage their online presence. GalleryDriver was the go-to data management application for many galleries in New York City for 12 years.

Read Perry's Bio