The following is not financial advice.

Welcome to back The Scoop!

Let's talk about Masternodes! They're all the rage because of passive income and such, but we're going to break it down a bit further.

Masternodes

MNs are special nodes that usually require coins to stake in order for them to operate. In exchange for helping provide XYZ additional functionality for the network (eg. mixing) or just simply extra horsepower, they usually get dividends in some form or another, such as a % of the transaction fees.

Pros:

• passive income
• helps network (mixing for privacy, regular node stuff or otherwise)
• locks up supply (MN requires n coins always be there)
• attractive feature to attract users/investors as the buzz word does have utility behind it

Cons:

• can promote centralization (depends on protocol rules)
• short term hype that can inflate the coin's price
• requires dev resources that could be focused elsewhere

For example, PIVX masternodes can vote on proposals, but regular nodes cannot:
https://pivx.org/knowledge-base/masternodes-have-a-significant-advantage-over-non-masternode-owners-and-centralize-power/

There's also such a thing as MN shares, which is where one simply buys a share of a MN, eg. with the MonetaryUnit coin:
https://microcapcrypto.com/muemnshares/

The Final

So are they a good thing or bad thing?

We'd say almost always a good thing, but there are caveats (mentioned above) that one must watch out for. If you got in early (eg. DASH), they can turn into quite a profitable side benefit for holding the coin. For most folks, passive income is attractive and one can see both MNs and MN shares becoming more popular in 2018 as well.

And that's your scoop!

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One more time in case you didn't see the first two: this is NOT financial advice! Also, The Scoop authors may hold coins discussed here which may create some bias, but we try to be fair.