Here’s What Not to Do When Setting up a Masternode

masternode

#1


via merkle

In the world of cryptocurrency, masternodes play an increasingly important role. They incentivize coin holders to lock up vast amounts of a specific currency and provide valuable services to the network in the process. However, there are some concerns when setting up such masternodes, especially when it comes to people who do so for others.

CRIMINALS TARGET MASTERNODE NEWBIES

Anyone who has ever attempted to set up a masternode will acknowledge that the initial setup process can be quite tedious. In most cases, it requires basic Linux knowledge, although most of the modern altcoins support Windows-based masternodes as well. Even so, the process of setting up a masternode is daunting, and many people seek help.

While there certainly are honest people who will help set up masternodes without issues, not everyone can be trusted in this regard. It seems there is a growing number of criminals who help people set up such nodes and then steal their money. In some cases, tens of thousands of dollars can be lost in the process, which is anything but heartening.

A new thread on Bitcointalk documents this problem a bit. The owner of SetupMasternodes, a platform designed to spin up an altcoin masternode in seconds, confirms there is a growing problem in this industry. There is zero reason why anyone should allow an unknown individual to access their server or masternode wallet at any point in time. After all, exposing this information can have disastrous consequences where funds are concerned.

When letting someone access the server on which your MN is hosted, they can take control of the node in question. Since every masternode is linked to a cryptocurrency wallet and its associated private key, the funds are not safe from harm by any means. As such, anyone having access to this information can defraud cryptocurrency enthusiasts, which is seemingly happening on a regular basis these days.

While the growing demand for help with masternodes is rather interesting, it also makes this industry more appealing to criminals. Self-professed experts who help users set up such nodes are often the ones which people shouldn’t trust. Anyone who demands access to sensitive information associated with one’s masternode usually has nefarious intentions, as there are dozens of written guides they can share instead.

For the time being, the community will have to wait and see how this situation evolves. Anyone struggling to set up their masternode should ask for clear instructions rather than give other people access to their information. The only way to learn is by trial and error, and it is evident that users need to take their security very seriously.


#2

How many people here have at least one masternode on any coin/token? I’ve been working on setting up my first one and am beginning to think I probably should’ve started this several months ago as a source of passive income.


#3

unsure, but, definitely the mining rigs we have print money…


#4

I have researched it but haven’t went down the rabbit hole yet. Staking has had my intrests for quite sometime for the very reasons @john’s article discusses. I am not an average computer/user but the master node setup is outside my expertise as I traditionally stick to the hardware side of things.


#5

Well… If we are talking about the PoS, then, yes, that can be quite dangerous to delegate such a task to someone…
But if you’re running a node for a PoW coin… I don’t see the problem with that (unless they install a backdoor to access your network).
As I always say “Don’t trust. Verify”
That should be the motto of anyone doing something on a PC


#6

The article is talking about MasterNodes which is neither PoS or PoW. Dash has masternodes which pay you for part of the transactions I am not sure exactly how this differs from say a Bitcoin Full Node but I know it is quit different as the setup process is drastically different. I just do not understand what the MasterNode provides to the network that a Full Node wouldn’t.


#7

Well, if I’m not mistaken, Masternode is a kind of a Full Node for a PoS coin. As It has a voting rights and differs in governance, masternode can be used to verify TXs on the network (and therefore gaining the block reward).

So the difference between a full node and a masternode is that a full node is supposed to relay (or propagate) the “nearest” TXs to the miners (PoW-model), and masternode can verify the “nearest” TXs itself (PoS-model).

That’s why TXs that are done by using a masternode are almost instant. It verifies itself.


#8

Cool. Like I said I do not fully understand them and was under the impression they were vastly different, because staking doesn’t always require an online node so maybe that is why I thought they were so different.


#9

Masternodes are usually “secured” with X number of tokens dedicated and kept frozen in a wallet. Different coins have different stipulations. As a reward for staking so many coins, the masternodes (MN) usually get a higher reward payout. A MN will get priority treatment to processing data/transactions on the token’s blockchain, be it PoW or PoS or whatever the protocol the token is processing it’s blockchain with. For example, Steemit calls it’s master nodes Witness Nodes of which the top 19 voted witness servers always participate and next two chosen at random from next 100 witness servers (or something like that). (sound anything like EOS’ upcoming infrastructure, anyone?).

Anyway, DASH, for example, requires 1,000 DASH committed to be elevated to MN. That’s something around $3 million IIRC. Another “hot” coin is DeviantCoin which requires 5,000 (which amounts to about $24k) and it pays out about $1,000/day according to their calculators. The tricky part is the calculator was based on 250 MS’s and there’s 460 MNs today…so my guess is that the reward level is closer to $500/day. At the same time, this is a very young coin and not much known about the project so may be a complete SCAM.

So, masternode participation needs some due diligence as well as the funds to spin one up.


#10

@tedward and I have looked into setting up Masternodes (SecureNodes). It is quite a processes and does require that you store coins on the nodes wallet for it to be active. Once you have placed the coins on the nodes wallet, you can not remove them unless you want to bring your node offline and stop earning that passive income. You will also have the expenses of running the node on a server.

We looked at ZenCash, I believe, and the earnings are based on the transactions that come through your MN. You earn 3% per transaction.

I’m not saying it is a bad idea. I’m just giving people the information I learned.