This post was originally posted on BolehVPN's blog.
8 February 2016
Special Thanks to:
moocowmoo for going through my guide and helping me improve it and making Dashman so awesome
TaoOfSatoshi for making the original awesome Dummy's guide
tungfa For always listening to my suggestions.
@TicoSonny on Telegram for giving me the idea to revamp the existing guides.
What is a Dash Masternode?
Dash, is a privacy centric, anonymous and innovative digital currency that seeks to solve the drawbacks of Bitcoin. These improvements are achieved primarily through a layer of users hosting servers that provide services on top of Dash which are called masternodes.
Masternodes enable the following services:
- InstantX (instant transactions). In contrast, Bitcoin takes about 10 minutes to confirm a payment.
- PrivacyProtect (anonymous transactions). In contrast, Bitcoin transactions are totally public and traceable. Only the identity of the addresses is anonymous.
- Dash Evolution (a decentralized payment processor (think a decentralized Paypal).)
Masternode users also are given voting rights on proposals. Each masternode has 1 vote and this vote can be used on budget proposals or important decisions that affect Dash.
How much can you earn from hosting a Masternode?
Masternodes cost money and effort to host so they are paid a share of the block reward to incentivize them. With current masternode numbers and rewards masternodes earn approximately a 14% return on 1000 Dash (which means 140 Dash or USD593.60 at current prices) for the year of 2016. This rewards fall off in subsequent years but as the value of Dash is rising and the supply of Dash goes down, masternodes should still be sufficiently incentivized. This projection also doesn't count the fees that masternodes earn whenever someone uses its services (InstantX and PrivacyProtect).
What do I need to host a Masternode?
- 1000 Dash: Arguably the hardest part. Dash can be obtained from exchanges such as Poloniex, Bittrex and LiveCoin. Shapeshift's service is also an excellent way. You can also use
- A server or a VPS installed with Linux: For the purposes of this guide we will be used Ubuntu 14.04 LTS. We recommend cheap VPSes such as from Vultr and DigitalOcean though any decent provider will do. Generally a low specced one will do. I use the 5 USD ones from Vultr and they work fine.
- A dedicated IP address: These usually come with the VPS/server.
- A little time <3 When I first got into masternodes, there were only a few guides around and did not cover all the scenarios. It took days for me to figure out the best ways to do everything. However, the process now takes a few minutes. With this guide it, I hope it will make the process a lot easier.
- Node40 You can tell Perry that Reuben from BolehVPN sent you! (perry [a] node40 dot com)
- Splawik Supershare Hosting Service Tell Splawik (splawik21 [a] dash dot org) that Reuben from BolehVPN sent you! He also does share services where if you don't have 1000 Dash you can share with other people too! Splawik is an official member of the Dash team.
- Masternodehosting by Holger (flare). Holger is an official member of the Dash team.
- Moowcowmoo Masternode.Me Moocowmoo is an official member of the Dash team.
Step By Step Guide in Hosting a Masternode
This post assumes you are familiar with setting up a Ubuntu 14.04 VPS and already have a Dash wallet installed on your local computer.
If you do not have your Dash wallet yet, you can download the client from here. You can also read full documentation on the Dash wallet here.
If you need step by step instructions on setting up a VPS, you can use Tao's Masternode setup guide for dummies which has a section on setting up one in Vultr.
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