3 Secrets they don't tell you about Masternoding Cryptocurrency
Hey it's Alexander from Limitless Insights. Today we'll be covering 3 Major Problems that nobody tells you when they are promoting masternodeable cryptocurrencies. I hope that by revealing these issues, everyone can understand the risks you’ll be undertaking before recklessly jumping into the temptations of high returns.
1. High Collateral / Barrier to Entry
One of the first most important things to consider when investing, is the amount invested. Most if not all Masternodeable Cryptocurrency requires us to lock up a certain amount of coins as collateral before we can even setup a masternode and earn profits.
For examples, I'll use the more popular Masternodeable Cryptocurrency with higher market capitalization to illustrate.
Sapphire (SAPP): $479 million Market Cap
- Approx 4.4% Returns per month
- Requires a collateral of 200,000 coins to run a Masternode
At current prices, 1 SAPP = $0.43
200,000 SAPP = $86,000
That is a huge $86,000 investment to get started with earning 4.4% returns every month.
DefiChain (DFI): $1.25 Billion Market Cap
- Approx 5% Returns per month
- Requires a collateral of 20,000 coins to run a Masternode
At current prices, 1 DFI = $1.39
20,000 DFI = $27,800
That is still a huge $27,800 investment to get started earning 5% returns every month. I believe I’ve made my point.
2. High ROI / Negative Price Action
Now you might ask : “Why is High ROI a problem?”
First you have to understand how you profit from Masternodes.
You lock up the collateral of the native coin and use them to run a masternode, which will pay you in the native coin.
You then sell the native coins for Bitcoin or other currencies to liquidate and cash out your investment.
This means that the returns from running a masternode is increasing the circulating supply of the cryptocurrency. The higher the returns equates to a higher increasing circulating supply.
What’s wrong with increasing circulating supply?
Price of a Cryptocurrency = Market Capitalization / Circulating Supply
Assuming no new investors are coming in, and the Market Cap is stagnant, increasing the circulating supply will naturally dilute the price causing downward price movement.
Projects use high returns as a way to tempt new investors into onboarding, however usually there isn’t enough new investors to create enough buy pressure to ward off the negative price action from a rapidly increasing circulating supply. Hence the price falls quickly.
Let me explain with an example.
Previously in May, I wrote about this Masternodeable Cryptocurrency called Beldex which at the time was reporting 10.73% Monthly Returns
Beldex (BDX) : $530 million Market Cap
- Approx 10.73% Monthly Returns
- Requires a collateral of 10,000 coins to run a masternode
If you bought on 31st May, 1 BDX = $0.075591
The minimum required collateral is 10,000 BDX which translates to $755.91
Over the course of 3 months — June, July, August, running your masternode has yielded 10.73% x 3 = 32.19% (3219 BDX) This brings your total holdings to 13,219 BDX
However by 31st August, the price of BDX has fallen to $0.058654 as the buyinig pressure from new investors were unable to counteract the selling pressure from existing users who are trying to cash out their profits.
Hence the value of your holdings,
Originally 10,000 BDX valued at $755.91,
is now 13219 BDX valued at $775.35
This means that your net profit in 3 months is only $19.44 which roughly means that your average monthly return is only a miserable 0.857%
Were they lying about the monthly returns?
Not at all. The masternode paid out its rewards in their native coins just like it said it would. But whether you actually profit from your investment is dependent on the price remaining constant or increasing from the time you invested.
3. Trading Volume
Trading Volume is probably the most important factor when it comes to liquidating your profits and cashing out from your investment.
It’s a free market, there must be a buy order to fill a sell order.
In cryptocurrency with low trading volume, there is usually a lot of sell orders and inadequate number of buy orders to fill the demand.
Therefore, when you are trying to liquidate your masternode rewards, the lack of buy orders to fill the sell demands will prevent you from selling and liquidating your profits.
For instance, NodeTrade (MNX) : $24.1 Million Market Cap
- Approx 85.67% Monthly Returns
- Requires a collateral of 300 coins to run a masternode
Today’s Trading Volume for MNX is $909
See that the number of sell orders are almost double the number of buy orders on the Birake Exchange:
If all of these variables & uncertainties scare you away from investing in Masternodeable Cryptocurrencies, then just stick with Yield Nodes like I do. Yield Nodes invests in 18+ Masternodeable Cryptocurrencies and has been paying out investors like myself for the past 3 years since 2019. Averaging monthly returns of about 9% up to 15%.
You can see my past articles regarding my experience with them and the profits I have gotten month after month.
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Once again, Thank you for reading so far! :)
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Disclaimer: All information is for educational purposes only and are not intended to constitute legal, tax, accounting, financial or investment advice. I am not a professional financial advisor, attorney or account, nor am I holding myself out to be. There is no guarantee that you will earn any money using the techniques and ideas mentioned in this video. All financial opinions expressed are from personal research and experience. There may be affiliate links, meaning that I’ll receive a small commission when you click on my link. The information, opinions and views contained herein have not been tailored to the investment objectives of any one individual, are current only as of the date hereof and may be subject to change at any time without prior notice. I do not take ownership of the information described here. Your level of success in attaining the results claimed will require hard-work, experience, and knowledge.
