To begin, let us define a Masternode.
As the name implies, a masternode is more powerful than a node in terms of roles that a regular node lacks.
A masternode is a computing device that stores the entire blockchain ledger of a particular cryptocurrency.
They encourage node operators to perform the essential functions of running a blockchain.
Masternodes act as a kind of backbone for blockchain networks, resolving any issues that may arise through their collateral-based system.
On a blockchain network, a Masternode is similar to a regular node — a computer containing data that can be linked with other computers — but with more responsibilities.
To be eligible for a reward, masternodes must commonly collateralize a portion of their cryptocurrency holdings.
The circulating supply is reduced by collateralizing, or staking, cryptocurrency into the Masternode.
Lower supply means both higher demand for the cryptocurrency and less selling pressure.
Masternodes are rewarded in cryptocurrency payments, which greatly reduces the financial cost of running a Masternode — the operator must ensure that the computer (or server) hosting the masternode is on and operational 24 hours a day, seven days a week.
These rewards can be substantial, which is why Masternodes are quickly becoming a suitable option to mining.
Let us now define what a Service Node is.
A Service Node is essentially a computing device that keeps a network running.
A Service Node is a phone, computer, or any other device that can receive, transmit, or contribute to the blockchain.
Service Nodes provide the same benefits as Masternodes, but they have more going on behind the scenes.
They are the next iteration of Masternodes, and because they provide more functionality, they have the potential to earn greater rewards.
The term ‘Service Node’ is fairly new to the cryptocurrency industry, despite the fact that their implementation has been in place for several years.
Essentially, a Service Node is a Masternode that adds additional services to a blockchain network, allowing for the creation of a more functional product with a better user experience.