Lecture 6.0.0. Nodes and Masternodes
Other common terminologies you will come across much frequently in the Crypto Market are Nodes and Masternodes.
Blockchain is simply a digital data that is kept in many computing devices. Such computing devices include a computer, a phone, etc.
Any of these computing devices that can receive, transmit, and/or contribute to the digital data (blockchain) is called a node. Therefore, if you connect your phone or personal computer to a blockchain, your phone or personal computer becomes a node of that blockchain.
Thus, when you hear that someone operates a node, it simply means the person has set up a computer device by which he receives, transmits, and/or contributes to the function of a blockchain. By so doing, such a person receives cryptos as rewards from the blockchain.
However, as discussed in Class 2 of the Secondary SOC, POW blockchains, which are the first generation of blockchain, are a bit slow when there is traffic congestion. This is referred to as the scalability problem. Therefore, POS blockchains, the second generation of blockchains, were invented in 2012.
As many people started to use the POS blockchain, the POS systems started to have almost similar scalability problems of speed reduction due to traffic congestion.
Hence, in 2014 Dash cryptocurrency was launched by Evan Duffield in which certain computers were set up to, not only do the services of nodes, but actually coordinate the functions of these nodes. These super-computers are called masternodes.
After Dash introduced masternodes to its blockchain, many blockchains have now bought the idea. Some cryptocurrencies that run masternodes include Zcoin, PIVX, Horizen, Energi, and UMI.
Presently, in the Crypto Market, Dash maintains about 58% market dominance over all other masternodes. Meaning that other cryptos that offer masternodes are also profitable with about 42% control of the market.
These masternodes will validate transactions, increase speed and make sure that transactions through blockchains remain anonymous. Anyone who runs a masternode is therefore called a Validator.