Masternode is a special form of the node (that normally verifies transactions on the network). What sets masternode apart is its governance and voting rights as well as increased transaction privacy and instant transactions, but perhaps the most known benefits of a masternode are that some of the block rewards are granted to the owners of masternode. By setting aside a set number of a coin on a masternode, an investor can get a stable reward much like how interest is given at banks.
1) Masternode Concept – Masternode is same as a full node of bitcoin with additional features like
* Increasing privacy of transactions
* Doing instant transactions
* Participating in governance and voting
* Enable budgeting and treasury system in cryptos
If you see the above features, it is not possible with a full node. Full node or desktop wallet are only kept a full copy of blockchain in real-time.
Masternode also keeps a full copy of blockchain in real-time as well as it makes the secure and fast network for the community. To set masternode of listed coin dash, pivx etc. you need to put some coin in that masternode wallet which is called collateral.
2) Optional privacy – We can categories transaction in three types.
1 -Normal transaction – This type of transaction is pseudo-anonymous, just like Bitcoin. They are the least expensive exchanges to execute and are the default protection setting.
2 -Semi-Confidential – This type of transaction uses the semi Confidential Transaction (semi CT) privacy protocol developed by Bitcoin Core developer Gregory Maxwell to keep the transferring amounts visible only to the exchange members (and those they assign), while as yet ensuring the exchange’s cryptographic uprightness. This is a mid-level security choice and is more costly than open exchanges. Mathematical and cryptographic details related to the semi CT privacy protocol are available on Maxwell’s original investigation into the protocol.
3 -Full CT – This type of transaction uses the Full CT privacy protocol to hide both transferring amounts and participants’ blockchain identity by combining Cryptonote’s ring signatures and Maxwell’s CT protocols. It is one of the highest levels of trustless privacy protocol the crypto industry has to offer and was made famous by Monero. It is also the most expensive privacy setting to use. Mathematical and cryptographic details related to the Full CT privacy protocol are available on Shen Noether’s RingCT whitepaper.
3) Token escrow built in – facilitates bounties, payments made using smart contracts:- Mechanism of escrow as “Both buyer and seller need to deposit their coins into the contract address if anyone raise issue then coins automatically get the burn, but if both satisfies then trade get executed as expected”. Here we need to understand one thing if buyer or seller raise the issue then contract money get dumped without knowing the fact. So it will affect the mindset of both the parties. Here we need to introduce a new platform that can track the escrow functionality and modify it. So, that can make sure only wrong party get punished.
Proof of Stake:
Proof of stake is a substitute to reach an agreement or decentralized consensus. Recent studies suggested running and maintaining POW networks is expensive as powering millions of homes in the US. POS is a much more user-friendly alternative to POW.
In this sort of accord display, the number of coins you have kept in the system matters. The greater your stake is, the higher the odds are that you won’t break the framework. Dissimilar to POW, POS squares are not mined yet rather produced. Members who have a specific stake in the framework get picked pseudo-arbitrarily to manufacture and after that including hinders into the blockchain.
This pseudo-arbitrary determination happens in the wake of assessing different elements to ensure that not simply individuals having a massive stake are chosen, anyway, others are likewise allowed to get chosen. A portion of the choice variables are coin age-based determination, master nodes, randomized block selection and so on
Delegated Proof of Stake
DPoS (Delegated proof-of-stake) is an algorithm for achieving consensus in a decentralized environment, which is an alternative to Consensus PoW (Bitcoin proof-of-work) and PoS (Peercoin or NXT proof-of-stake). DPoS was developed in 2014 as part of the Graphene project and was first involved in the Bitshares project, later in the Steemit project.
If we briefly formulate the basic principle of the work of DPoS, it will look like this: the division of voters and validating participants. As a result, network participants who have the right to vote in the system (coin holders) are not the transaction validators. In this manner, one subset of the members chooses another subset, which thusly will produce the squares.
If they can truly pull it off, by then they will have the DPoS to thank.