The Difference Between Masternode Private Keys and Wallet Private Keys
At https://nodesupply.com we receive a lot of questions regarding the setup of masternodes. The concept of masternodes is still quite new to the public, and it can be difficult to understand if you don’t have a technical background in the blockchain world.
One of the questions that we receive the most: “Are my funds safe if NodeSupply hosts my masternode? You ask for a private key!”
The quick answer: yes, your funds are safe. They never leave your wallet. There is a big difference between a generally used “private key” and a “masternode private key”. During the setup process, you start with the following:
- Create a new address
- Send collateral (like 10,000 SMART for SmartNodes) to that address
- Generate a “masternode private key” (or “smartnode genkey” for SmartNodes)
It’s important to understand what this masternode private key is used for. It does not give access to any funds and it is not a ‘normal’ private key. The masternode private key allows the external wallet (on a VPS) that runs the masternode software to be connected to the local wallet (often on your PC). The local wallet can then control the masternode: send start/stop commands to it.
This is why I like to refer to the masternode private key as “masternode genkey”. The naming of the key is quite confusing, as a “private key” generally refers to a long hash of characters that gives access to funds of a public key (an “address”) in a cryptocurrency wallet.
I hope this short post clarifies what the difference is between a wallet private key and a masternode private key, and that in the model of external masternode hosting, your funds remain safe.