Blockchain technology has disrupted several significant industries like Banking, Cybersecurity, Healthcare, Supply Chain Management, etc. As many as 65 big industries have either adopted blockchain or plan to adopt it in the near future. However, widespread adoption of the technology remains a challenge.
The biggest challenge facing emerging blockchain solutions is scalability, which hinders the widespread adoption of enterprise blockchain. The reason behind limited scalability is the Blockchain Trilemma.
What Is The Blockchain Trilemma?
Enterprise blockchain solutions have three goals: scalability, security, and decentralization. However, to increase scalability, enterprise blockchain solutions must compromise on decentralization and security. The confusion over which of the three goals to prioritize during the deployment of a protocol is known as the Blockchain Trilemma. While Layer 2 solutions help protocols tackle the challenge to some extent, the need for more effective and innovative solutions is always there. This is where Masternodes emerge as a viable solution.
What Are Masternodes in Blockchain?
One must understand the role of nodes in a blockchain network to understand the concept of Masternodes. A node is the smallest fundamental unit in a blockchain network. Also known as the custodian of the blockchain network, a node refers to a computer in the network that adds a new block to the network, validates transactions, and keeps a copy of the ledger to keep the network secure.
Unlike regular nodes, Masternodes do not add new blocks to the network. They validate new blocks and perform special governance roles. It means that Masternode operators must hold a certain amount of cryptocurrencies to set up a Masternode. But why would someone purchase cryptocurrencies and set up a Masternode to power a network? Because Masternode operators are rewarded with guaranteed crypto earnings (usually a fixed percentage of their stake at regular intervals). It is a win-win situation for both parties. The network gets added security, whereas the node operators get a steady passive income.
Accelerating Enterprise Blockchain Adoption Through Masternodes
As mentioned earlier, crypto protocols face substantial challenges in increasing scalability as it affects the security as well as decentralization of the network. Masternodes create a digital twin of the data that passes through the ledger, enhancing the network's security. With a digital backup of critical data, enterprise blockchain solutions can guarantee complete data security for their clients. Also, Masternodes help crypto protocols enhance decentralization by adding more voices to the decision-making or governance process.
Expanding a network is costly. Adding Masternodes to the network reduces the cost burden as it is the validators who set up the node using their computer and energy resources. With a guaranteed passive income, there are enough takers of this give-and-take arrangement. Clearly, Masternodes appear as a viable solution to the Blockchain Trilemma, one of the biggest challenges in the widespread adoption of enterprise blockchain. With that hurdle out of the way, the adoption of enterprise blockchain solutions is bound to skyrocket.
Benefits of Masternodes in Blockchain:
Masternodes help blockchain solutions establish a network of servers to make the implementation of the decentralized distributed ledger easier. One of the biggest selling points of the blockchain ledger is its immutability. Masternodes provide better outputs, making the platform immutable, per se. Masternodes also enable instantaneous transactions, enhancing the performance of a blockchain network substantially. Enhanced security, Secure Transactions, and Instantaneous Transactions are the three key benefits of Masternodes from the output perspective. While the functions of Masternodes may vary from crypto to crypto, here are some of the most common functions:
Decentralized Governance: Masternodes serve one of the primary purposes of blockchain - decentralization. The validator nodes in a Masternode get voting rights. This enhances the decentralization in the blockchain network. Having a say in critical decisions ensures that node operators remain committed to the security and performance of the network.
Lightning Fast Transactions: When you add Masternode validators to an existing network, the capacity of a blockchain network increases manifold. Consequently, the network can verify transactions at a lightning-fast speed. Remember the scalability challenge? This is how Masternodes help blockchain solutions tackle that challenge.
Increased Preparedness: A blockchain network needs to be up and running 24/7. In order to have such a performance, quick detection and resolution of issues are critical. Masternode operators are the first ones to know if something goes wrong with the blockchain network. As a result, they can respond quickly to ensure that the network remains functional.
Increased Security: We have another of the Blockchain Trilemma issue addressed through Masternodes. The instances of attacks and breaches on blockchain networks have been rising exponentially over the past few years. Masternodes add to the security of the network by acting as a force multiplier against hacks and breaches.
Data Security: Another primary principle of a blockchain network is to ensure secure storage and transfer of data. In the form of Masternodes, a blockchain network gets dedicated high-speed servers. Masternodes remain synchronized to serve as a reliable source of information for every participant on the network.
Blockchain solutions have a lot to gain from setting up Masternodes. However, encouraging more users to set up validator nodes is a task. Masternode validators need to fulfil specific requirements. These requirements generally include the following:
- Having a certain amount of tokens as collateral
- Having a computer or a VPS that remains online 24/7 to run the node
- Having a full copy of the blockchain
Conclusion
Many Layer 1 blockchain solutions are setting up Masternodes as they are unable to scale. Major cryptocurrencies like Bitcoin and Ethereum have struggled to increase the TPS (number of transactions per second) since they are Layer 1 blockchains. Developers have been working tirelessly to find scalable solutions. When something as simple as users putting their cryptocurrencies as collateral can solve the problem, the importance of Masternodes increases substantially.
Some of the most popular cryptocurrencies, like Dash, ChainLink, and Stratis, have embraced the concept of Masternodes. Going forward, many more Layer 1 networks can follow suit to boost the TPS. Scalability is critical to the mass adoption of enterprise blockchain solutions, and Masternodes can play the catalyst in that adoption.