Masternode technology is an invention of Dash. They are special nodes on the network that are more than just another peer connection. Apart from running full nodes and relaying transactions they provide several functions to the network.
To run a masternode you need two things: 1. A certain amount of coins that needs to be locked in your wallet and 2. A computer that is hooked to the Internet and running 24 x 7. Once the masternode is online they support the blockchain and power the network by providing special functions such as: speedy transactions, anonymous transactions, voting rights and other decentralized operations. For contributing such functionalities masternodes are rewarded.
Previously we’ve explained the difference between staking and masternodes. It explains the functions of masternodes, how it works and how masternode holders are rewarded for providing service to the network. Now the question is when wallet staking can be performed on local computer why masternode setup require VPS? Here we are not going to explain how to setup a Virtual Private Server and run a masternode. Instead we’ll discuss why a VPS with dedicated IP is required and why running a masternode directly from your Windows computer won’t work.
So what does one need in order to run a masternode? Since the invention of Dash several coins started implementing this technology as this system benefits both the network and its users. Some of the popular Masternode cryptocurrencies are Dash, SysCoin, PIVX, Smart Cash, Zcoin, Phore and there are many others. Whichever coin you choose; to run a masternode you’ll basically require the following 3 elements:
1. Coins Required: To host your own masternode you first need a specific amount of coins as a collateral and this collateral requirement depends from coin to coin. For example Dash requires 1,000 coins, SysCoin requires 100,000 coins and PIVX requires 10,000 coins.
2. VPS (Virtual Private Server): Your collateral amount must be present 24/7 to secure the network and to generate revenue for you. To ensure your node runs stable and efficient at all times a VPS/server is recommended. Just like the collateral amount the resource requirements of the VPS also depends. For most masternode coins including Dash the $5 VPS from Vultr or Digital Ocean is enough. Anyways the better the hardware the better your node will perform.
|CPU||1 Core||2 Cores|
|MEMORY||1 GB (2GB vSwap RAM)||2 GB|
|HDD||25 GB SSD||40 GB SSD|
|BANDWIDTH||1 TB Data Trasfer||3 TB|
|IP ADDRESS||1 IPv4||More than 1 if you decide to setup multiple nodes.|
Note: The memory bandwidth and the disk space requirement increases as the network of the cryptocurrency grows.
3. Publicly accessible static IP address: Each masternodes on the network connects with other nodes and each masternodes on the network requires an unique IP address. You’ll get a permanently allocated IP address when you create the server.
Why PC is not suitable for Masternodes?
There are several reasons for one to run a masternode from home instead of hosting it on VPS. But for most beginners the main reason to choose this option is security concerns. If you are one of them then you must note that masternodes hosted on VPS don’t have access to your funds. They are remotely controlled which keep your coins safe and secure. For more info read this guide on Hot / Cold Masternodes. Okay, now let’s get into the topic.
First, is it really possible to setup a masternode without a VPS? Yes, you can run masternodes from your home computer or Raspberry Pi but it is not recommended. Why? As we said Masternode needs a static IP address and they need to run without any interruptions. Most home computers are connected to dynamic IP address and most home broadband connection are not as stable as data centers. If the IP address changes or if the network connection goes down then your node needs to start over which as a result you lose payments. This is one main reason why you need to setup and host masternode on a VPS.
But let’s say your local computer has all the requirements to efficiently run a masternode such as: high speed Internet connection with high availability, A static IP address, unlimited bandwidth to serve the blockchain and a specification that is powerful enough to withstand DDoS (Denial-of-service) attacks. Now what are the risks?
The risks involved:
By hosting a masternode locally the IP address of your computer gets exposed to all over the Internet. Do you think keeping your wallet unlocked with 1000 Dash coins is a good idea? By exposing your network you are not only putting your coins at risk but you are risking other personal data that are in that system. But what if I run my masternode behind a VPN (Virtual Private Network)? Sure, you should be fine! But did you think about the electricity and usage cost of your computer? It costs you more than the price of a VPS.
If you are looking to run a masternode then choosing a VPS from a reliable hosting provider is recommended. If you need a suggestion then either go with Digital Ocean or Vultr which is what most recommend.