A Master node is a decentralized server that stores a copy of the entire blockchain of that coin/token. Masternodes are similar to full nodes except better, masternodes allow for anonymous transactions, instant transactions(This is amazing) and decentralized governance.
1) Anonymous transactions: For example DASH has a feature called PrivateSend. The way PrivateSend works is that the transaction amount is broken down into smaller denominations, ie. 0.01 Dash, 0.1 DASH, 1 DASH and 10 DASH. The PrivateSend transaction is then mixed with coins from two other users who are also transacting on the blockchain.
2) Instant transactions: Instant transactions are possible because because every time a miner finds a new block a random hash number is generated and this hash number is how we select a random group of masternodes which for the entire time of the current block being mined will be the masternodes that are allowed to approve the instant transaction. They do so by instead of the transaction being processed through the miners as per a normal transaction, the instant transaction gets sent to the masternodes instead and is then immediately locked there and therefor the balance is immediately given to the receiver of the transaction. Then the masternodes will broadcast the transaction to the miners to be mined after. This does mean that funds could be lost if you enter the wrong address to send your instant transaction to due to it being instantly locked with the masternodes, but in a world where we scan a bar-code to pay, is that a problem? How often will we actually be typing in a address?
3) Decentralized governance: Masternodes make decentralized governance possible because the masternodes are the ones who make the votes proposed to that coin/tokens blockchain. This being said running a masternode requires a descent amount of that coin/token and then still makes you hold collateral on top of your masternodes cost which is another bunch of that coin/token that does nothing just sits there, this prevents people from jumping from coin to coin like miners do because it requires a lot more to run a masternode and this bringer us more responsible and accurate decentralized governance. This isnt only about it costing more but also that the setup and process of a masternode is a lot more complex than a miner which is also why it prevents people from jumping through coins/tokens.
Some masternodes work slightly different than others but this is what masternodes are.
masternode is like mining in some case , if you get in earlier than others you can buy required masternode coins cheaper and ROI is much more than a lot of people comes in there, I wish i set Dash masternode when it was 1$ , Now not only ROI has decreased but also the price of Dash has extremely increased , You can find masternode coins at masternodes.online
