Bitcoin Forum

I wanted to share the economics and logistics for those who want to know the differences between Mining vs Masternodes and how they compare, and identify the differences between those two.

Masternodes is a newer concept, it started with the release of Dash Masternodes in 2015

With Masternodes, you earn an income on a regular basis based on the Payout structure provided by each independent coin developers. We recommend you research what the Developers have programmed as a payout structure for the particular masternode you wish to run.

The differences between Mining and Masternodes are as follows:
Mining requires Electricity charged at a high cost, and Physical Mining Equipment.
Masternodes requires a VPS, and ownership for the required amount of coins to run a masternode.

Some coins require 1,000 and they can go up to 500,000 coins required to run a Masternode.

When it comes to mining, you do not need to purchase a set requirement of coins, instead, you would put your investment towards hardware that you need.  I hope this gives some insight to this community when it comes to defining Masternodes


Educational piece provided by:
SetupMasternodes.com (http://SetupMasternodes.com)

Masternode is indeed quite beneficial in terms of the environment, but unfortunately this is not very popular in the community. The fact that many people spend more of their money to buy mining equipment, I don't know for sure the reason? but I think masternode has many risks

Does it mean that Masternodes has a lot of benefits as compare to mining? I mean it looks like it doesn't require you to have a big money to invest to begin with and you're off to go? Sorry for my noob questions but it looks like its a interesting concept. I'm also under the impression that not all coins/tokens are set-up just this?

From this brief explanation about the difference between mining and masternodes....

I interpret it that you saying masternodes offer fixed payment rates which solves uncertainty rates that are common with the old ways of mining?

If I was correct, don't you think flexible rates can sometimes mean profitability as in the case of mining.

There is a masternood exchanges. Its only enough to not trust the huge investment on MD systems in my guess.
Very very little exclusive lucky group does good job if they collect the enough coins at start, just like dash.

You need at least 42 Zen for a Horizen secure node or 500 for a super node. You're rewarded for contributing to decentralization and maintain compliance  (10% of the block reward) https://www.horizen.global/supernodes/

https://preview.redd.it/70a8nkmnlxp01.jpg?width=960&crop=smart&auto=webp&s=cbad50bad818caffdcd4dcf64018c132c2ed5971

Mining could yield you much more profits and steady income however masternodes can be sold at any given time.

When you are buying mining equipment more often than not you pay with fiat which is a strict price and doesn't really change a lot, however when you get into a masternode deal you buy those crypto and the fiat amount could change any second, the dash masternode that was probably like a million dollars last year worth closer to 200 thousand now, which means no matter how much it generates it wouldn't matter since it dropped.

Mining can still be net negative for you but less likely even during a fall if it profits it profits so there is no worry there. Basically it depends on your liquid amount, if you want to be capable of getting out whenever you want the masternode business is better and if you want to invest heavily and have a higher potential than I think mining is better.

the second point is the same as mining crypto but masternode is simpler because it only uses VPS, but there is a risk if using VPS because VPS owners can revoke VPS that you rent without notice, I have read the VPS rules not to mine cryoto

still need a vps to make it work

Since op bumped his own thread I will respond with my take on it since I did both back in november 2018 when this thread was started until now.


I would believe mining is safer then investing into masternodes. There have been so many bad ones out there so it is hard to decide which one is good and which ones are bad. Because the amount needed to invest into one of these good ones are alot and it seems you are paying out a loan so to receive this amount back after receiving your rewards for staking from your wallet.
I tried with one coin and it failed miserably because the coin tanked a few weeks later after accumulating enough to start a masternode so the rewards were only worth a quarter of what it was when they first released the specifics of how much each holder would earn. So it is all dependent on many factors.
Atleast with mining you have the hardware to fall back on once you are happy with the amount of coins you have used the equipment to mine with and part out the system when you want to.
So more flexibility when it comes to getting back what you spent on a mining farm.

I believe that mining is safer than run a masternode, and if the equipment is one which can mine more coins, script coins then is safer to recover money, but always depends of price.

we call this "indicators" because anything you invest into, you must follow the Positive or Negative indicators of any crypto coin.

Both of them will fail if the coin doesn't go up against the Dollar.

I made many researches on both. In end I came to a conclusion that both of them are unnecessarily time consuming if you are after making money. (which you are)

Just buy and hodl your favorite coin and do something else in your free time.

I am very sad I don't know much about difference and also previous answers aren't fully satisfying.
Wish I could tag @achow101 he knows a lot about bitcoin's technical things, better to move this thread in Development and technical discussion section.
Otherwise as I know it's possible to make money with masternodes but why aren't they offered by scam creators? Cloud mining was abused by scammers but seems no one touches to masternodes.

IMHO, in mining(not cloud) you are secured with what you do. You mine, you get the coins but the choice of the coins you will mine depends on your standard. So if you went to the wrong coins, you have the coins but it has low value or worst, doesn't have.

While in masternodes, the legit ones sure they are profitable but investment is too expensive.

There are too many scam masternodes.

I think you didn`t do math very good here. You are comparing worth of masternode on ath with worht of masternode now, compare it with price from 2015 and you will see that that dash is very high priced. Second thing is that you can buy mining equipment but if price of coin you mine is to low you will not make profit, you have expenses for electricity too, increasing difficulty, you need to upgrade your miners from time to time.
Don`t compare prices from the time when they were high, I think for the people who are in dash for years its still profitable. Higher price suits miners and masternode runners, earlier you get in that`s better for your portfolio.

The trouble with the masternode coins is that if the volume is not high, then the price is open to manipulation. Manipulation can and will dump the prices. Then it will not matter how many coins you made by installing a masternode.

actually the problem with masternodes is that you are running a node to an altcoin and that is the risky part because we all know that all the altcoins are getting pumped and dumped so you are bound to be influenced by the dumping side of it for at least 80% of the time that you run that node since the pumps don't last that long.

I think that if you want to run a masternode you need more money to set it up.
This may be the reason why people still prefer the traditional mining process instead of masternodes. Also, in my eyes masternodes promote a centralized model of the crypto ecosystem.

You don't need a lot of money to run a Masternodes, mining is still expensive than Masternodes. All you need is a VPS which you can get for a couple of dollars. Depending on the amount of coin that you will need to be a Masternodes.


Centralized what do you mean by that?

This is the main problem with masternodes which you are really bound about dumping.Just take a look on what happened on Minexcoin wayback then when it do have masternodes.
It becomes popular and later on it do dumps and investors who do purchase more coins that have been parked do lost most of their investment.
This is why ill always prefer on buying my own mining equipment since you can able to see it physically and can still possibly mine out profitable coins instead.

that is the problem with any coin distribution system that is based on "profit" or in other words is designed in a way to give you more if you have more. at some point there will be whales who end up owning a large amount and they only keep it while they are pumping the coin and as they are done pumping they suddenly dump crashing the price hard.
it can happen to masternode coins, to PoS coins, and anything that is similar to that design.

In your opinion, whales who control most masternodes can control the supply or float? Why would Whales really hold a masternode unless they believe in it tho?

i didn't say whales control most masternodes, i said whales will end up owning a large amount of that coin which then will give them a huge profit for free.
and don't forget that a whale only believes in profit otherwise they wouldn't have become a whale in first place. so what happens is that they come in, make a huge profit, then dump and go out.

and it is not just about whales and control. it is about basic economics and the fact that this type of distributing "free money" is not a good design.
i know a country that banks are ruining the economy by giving high profits (up to 25%!) which is the same as staking rewards. guess what the inflation rate is? hit: it is above 100%

I also think if the cost electricity is cheap enough that to make a profit from mining better choose mining, but if the cost of electricity is too high and can't make a profit you should pay from own pocket and maybe hold coins for longer to get a profit, a masternode coin can bring some profit, but i think is small if the price not grow and on bear market is hard for masternode coins to bring profit.