5 Things To Consider Before Investing In A Masternode
Masternodes are like super-computers that help create new blocks on proof-of-stake blockchains.
Transaction fees are paid to the masternode owner for every new block that is created.
As such, running one is a lot like buying stocks that pays you dividends.
Not all masternodes are born equal though. In fact, some are to be avoided at all costs.
Below are five key pieces of advice to consider before buying a masternode.
1. Only invest money you can afford to lose
While you’ll continue to bring in passive income when owning a masternode, that doesn’t change the fact that the tokens you used to buy it could fall in value.
Buying a masternode is just as financially risky as buying any standard cryptocurrency token.
You’ll have a to buy a lot of tokens to afford a masternode, so it’s more important than ever to choose your masternode wisely.
2. Make use of masternode comparison websites
Masternodes.online is arguably the most famous masternode comparison website. It lists the 24-hour change, volume market cap, annual ROI, the number of nodes running, and the amount of coins needed to buy a masternode. You can get estimations of daily, monthly, and annual income, although it’s difficult for these to be accurate due to the volatility of the cryptocurrency market.
Alternative websites are masternodes.pro, crypto-coinz.net, or livecoinwatch.com. It doesn’t matter what website you use, as long as you take note of this information and compare your options before diving in to a purchase.
3. Always take note of volume
The volume of a masternode is important. If a masternode has no volume, it means no-one is buying them, and you won’t be able to sell it. If you can’t sell, it doesn’t matter how much it grows in value; YOU CANNOT MAKE MONEY.
By default, masternodes.online lists masternodes with the highest volume at the top of its list. It’s recommended to ensure the volume is at least three times the cost of the masternode.
If a masternode is brand new, it’s unlikely to have a high volume, and therefore you might want to risk a low-volume purchase, but this is the only possible exception to this rule.
4. Timing of purchase is key
The volatility of masternode prices is just as wild as the rest of the cryptocurrency market, but you’re forced to spend a bit more by buying a mass amount of tokens.
As such, it’s more important than ever to time your purchase well. Get in early as you can, and get out before the coin crashes.
5. Consider use case, community and activity
Some cryptocurrency experts advise to only invest in masternodes if you believe it has a strong case use.
Others say that the majority of new masternodes coins make up flimsy, pointless use cases, but that this doesn’t matter, because you can still make good money on short-term purchases, provided there’s a strong community and a lot of activity surrounding the coin.
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