Over the last few weeks it seems everyone is raving about Masternodes. Essentially as I’ve mentioned before BitCoin works on a concept called Proof of Work, which is where you solve complex maths to earn tokens essentially to keep the network running. Proof of Stake is another way of running a network whereby holding coins allows you to claim a reward for assisting to process transactions. My understanding is that Masternodes are basically part of that type of concept. One of the challenges with that approach is that it can lead to centralisation, as only a few people can afford enough of a coin to start up a Masternode, however the bar to entry isn’t that high for all coins. The website http://Masternodes.pro gives a breakdown of many of the coins out there which use this technology. It outlines the cost of entry and the expected return.
Frankly, some of the figures are ridiculous. I mean 1000%+ return in a year sounds a whole lot like a ponzu scheme to me… i.e. come and buy our coin… we will return coins to you, and then at some point will dump our whole stock and run, leaving you with worthless coins. Maybe not, but frankly looking at the website for some of these coins, you can see that there is very little substance there. It seems to me another example of a way to trick unsuspecting people into investing into a coin which the devs already have loads of and will sell to others to enter.
To be fair that’s not the case for all, for example Dash, Crown, ZCoin, Pivx are all good coins but generally with a fairly high entry barrier. Crown is the cheapest to enter of all these, and frankly the least exciting technology / aims wise.
All in all, anything that can provide a stable form of passive income is great, just don’t be caught out with some of these too good to be true numbers.