If you can't find a way to make money while you sleep, you will work until you die. Whether you believe this statement or not, when it comes to Cryptocurrencies, you really can make money while you sleep, eat and play sports!

There are a few ways you can achieve a passive income with cryptocurrencies and today we will focus on the differences between Masternodes (PoSe) vs Mining (Pow). Today we will at two different cryptocurrencies that use this technology, PIVX and compare with our old friend Bitcoin.

PIVX is a cryptocurrency that utilizes a decentralized ledger of transactions or blockchain which like Bitcoin and most other cryptocurrencies, is secured through community consensus via a mechanism known as Proof of Work or PoW. PoW refers to community members commonly referred to as miners working to solve complicated algorithms.



When these algorithms are solved and approved by all other community members running the blockchain software a new block is added to the blockchain and a small amount of the currency is given as a reward. Typically this reward goes to the miner, however PIVX differs a bit from this setup as another party also receives part of the reward.



PIVX’s reward system differs because it operates on a two-tier network, which in addition to PoW has a second group of community members running what are called masternodes or full nodes. The full nodes allow for a more robust set of financial tools including a budgetary system and decentralized governance, including community voting by masternode holders. The second-tier also allows for instantaneous transactions called InstantSend and fully private transactions referred to as PrivateSend.



This system of masternodes is referred to as Proof of Service or PoS. As masternodes allow for these important tools, the community members who run these full nodes receive part of the reward made by the PoW miners, with both parties each receiving 45% of the reward and the remainder going to the budgetary system of the blockchain. The community members providing PoS and PoW share the reward because they are both vital to the health of the blockchain. The masternodes oversee the work done by the miners, so far as to have the ability to reject invalid blocks, stop miners from collecting the entire reward or from adding blocks using outdated software.



Typical of most cryptocurrencies, miners provide the backbone for transactions that allow for sending and receiving of the currency and to stop fraud. PIVX goes a step further by adding another level with masternodes, which are themselves secured with the node owner placing 10,000 PIVX in holding to provide stability of the nodes. Although the node owners are free to take their Dash out of holding, doing so would take their node offline and they would not be eligible for rewards.



These two-systems do not overlap, as no mining takes place on masternode computers nor can a mining computer run a masternode. All of the miners and the masternode owners are members of the community and their work and support provide the financial strength of the PIVX network.