The Dream of Passive Income is Alive in Cryptocurrency

Everyone wants it— that feeling of waking up every morning to more money in your bank account than the night before.

A mentor of mine told me that a major mental shift occurs when you cross the threshold where your passive income exceeds your basic living costs. I’ve been focusing on that idea ever since.

Enter masternodes

I’m going to skip the whole cryptocurrency beginner’s lesson, because that’s not what this article is about.

Masternodes are servers running 24/7 with a full copy of the blockchain and a specific number of coins locked up as collateral. This provides additional features to a network like private send, instant send, and voting.

In return, you receive a portion of block rewards alongside miners or stakers.

Sounds amazing, but how do people in the community feel about masternodes?

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That feeling when you play it smart, and start staking those POS and MN coins. https://t.co/qeQBQL3hxS

 — @Panama_TJ

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mocho s day job remember pos/ masternode /miming? Well this is the reward. @dum are you in?💎👍🥂🥂 https://t.co/XlPNr06y9U

 — @cryptomocho

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The concept of a masternode was first deployed by Dash.

If you own 1,000 Dash (which today would cost over $300,000) and launch a masternode, then you’d be earning ~6 Dash/month (currently ~$1,800 USD) for an annual ROI of 7.12%.

And that’s in a bear market. Dash has been worth over $1,000 USD each, meaning that payout could be worth 3x what it is now.

Masternodes have been getting more and more popular, and many of the other coins that have implemented this system offer much higher gains, with far less of an initial investment.

Finding masternode coins

Checking https://masternodes.online/, you can find other projects like VIZZTOP ($VIZZ), where a masternode costs $160, and has an annual ROI of $3164.23%— meaning if this kept up, your coins will double in only 12 days.

Only it doesn’t keep up — gains like that aren’t dependable, as you can see from the decrease in rewards for VIZZ masternode holders below.

Daily VIZZ rewards. (source: https://masternodes.online/currencies/VIZZ/)

In 11 days, it’s gone from 2000 down to 700 (65% decrease.)

There’s a balance between ROI and sustainability. Coins that have been around longer offer predictable rewards, along with the confidence that a project will stick around for you to keep earning those rewards for years to come.

For reference, here’s Dash.

Daily DASH rewards. (source: https://masternodes.online/currencies/DASH/)

It’s much more stable in payout, and you can have the confidence that it will be around much longer than many of the unknown, insanely high ROI coins.

Take a look at https://masternodes.online/ and do some research about what’s out there. People like mocho17 on Twitter are great resources for finding lesser known coins with lots of potential.

You’ve got all the coins, now what?

It’s not vacation-time yet, because masternodes aren’t exactly user-friendly. Here’s the top result in Google for “how to setup a dash masternode”: http://dashmasternode.org/

“Please make sure you are technically capable before carrying on.”

The technical knowledge required is a major hurdle holding masternodes back from gaining tremendous popularity outside of technical and well-informed communities.

On top of that, you need to consider the fees for hosting a server, and in some cases, the additional risk of being hacked.

There are many of us interested in earning passive income that would love this to be more straightforward.

Masternodes won’t always be a pain

Fortunately, there are some innovative projects in the beginning stages of bringing masternodes mainstream.

One such project is GINcoin (https://gincoin.io/)— the turnkey masternode coin.

Their goal is to make launching a masternode achievable though only a few clicks, including hosting and paying for the server.

Ultimately, it will continue to get easier.

Launching my first masternode

With the promise of simplicity, having seen a lot of favorable interest around it on Twitter, and getting a good vibe from the Discord community— I chose GIN as my first ever masternode.

Other considerations were the high, but leveling-out ROI, and the growth potential (I’ll get to that soon.)

Step 1: Collect the coins

First I needed to acquire the 1,000 GIN required for the masternode (plus a little extra to cover fees,) and did so on CryptoBridge, the decentralized exchange (DEX.)

Since the circulating supply is currently small, and no major exchanges exchanges are listing it, it was actually a little tricky to acquire enough coins without paying a premium.

I sent some BTC to the exchange, and set some reasonable buy orders that were hit overnight to cover one third of what I needed. Then the price slowly crept up enough enough that I needed to send over additional BTC for the remaining coins.

Step 2: Secure it in my wallet

Within a week I had 1,003 GIN to cover any fees, and withdrew it to my GIN wallet, which I had downloaded and setup earlier (including using the password encryption feature to make the wallet more secure.)

Then it was time for the promised turnkey setup.

Step 3: Setup the masternode

I opened the GIN platform, clicked “Launch Masternode,” selected the currency for hosting fees (equivalent to $12/month in Bitcoin, Bitcoin Cash, or soon GIN,) and then clicked “Continue.”

The step-by-step process was indeed simple, though I had some questions during the process. This is when I learned that there’s someone monitoring the #support channel in their Discord 24/7. My questions were answered in under a minute, and I was offered personal support from one of the moderators.

After 15 minutes my masternode was up and running, and I’ve now officially received by first rewards.

Choosing your first masternode

Like any crypto investments you’re considering, it’s crucial that a project satisfies a real need in the world, and that their coins serve an actual purpose within their system. And do they have a plan for growth?

Here’s how I did my analysis on GINcoin:

Does it satisfy a real world need?

With masternodes growing in popularity due to the allure of passive income, and the difficulty of setting them up keeping people from investing, GINcoin was a good choice for me.

Do their coins serve an actual purpose within their system?

They’re planning on adding GIN as a payment option for hosting, which means that a masternode directly pays for itself. It’s possible than GIN could become the only method of payment, making it even more intrinsically valuable.

Do they have a plan for growth?

Their scope isn’t limited to only the GIN masternode ecosystem— they are offering their turnkey masternode setup service for other masternodes. Right now it’s available for 8 masternode coins, and they’ve only been around since February 23rd.

At the time of writing, https://masternodes.online/ shows 102,914 masternodes hosted across all the coins they have listed.

If GIN provided masternode hosting for 10% of the market, that would be $123,496.80 USD/month spent in GIN. Anyone using GIN’s service to host masternodes for other coins might also consider buying their own GIN masternode to cover all their hosting fees using the rewards they earn, causing the value to increase.

Checks out for me.

Conclusion

It’s exciting to finally be off the sidelines, and earning some passive income through my first masternode.

GIN was an easy place to start, and I’m planning to host a few more once the rewards accumulate. In the meantime, I’ll be researching the next one.

Any suggestions? And why?

Find me on Twitter, where I post next to nothing and read tremendously: https://twitter.com/earnenough/

The Dream of Passive Income is Alive in Cryptocurrency was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.