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Return on Investment (ROI)

In this section, we want to look more closely at the return on investment (ROI) that is often misunderstood in the cryptocurrency market and in connection with Masternode returns.

ROI is the abbreviation for "Return on Investment" and assesses the return on invested capital. One speaks also of return on investment or investment return.

Classically, the return on investment is calculated by dividing the profit by the total capital. There are various formulas and calculations to get the return on investment in terms of individual investment or total success.

Return on Investment is a measure of the percentage of profit and total capital, that is, the profit in relation to total capital invested. This key figure is used to assess the return on capital generated over a fixed period of time (usually one year). The "Return on Investment" is therefore an important criterion for measuring success and analyzing the success of investments and making various investments comparable.

It is important to understand that if you look at the statistics of a coin on or another statistic page, for example, the ROI refers to how long you can get out of your invested capital and the break even in has reached the currency of the respective coin. In general, the usual process looks like this: Before you can acquire a coin that you found on a Masternodes statistics page, you must first acquire Bitcoin with a fiat currency. Thus, the "return on investment" split here already in the face of the beholder. There are investors looking at their "return on investment" in fiat currency, bitcoin or the respective coin. However, in most cases the statistics pages always refer to the return on the respective coin.

There are a lot of coins on the respective statistics pages, which promise the investor a high ROI. But it is important to know that a high ROI does not mean high profits. Ultimately, you benefit from high payouts = high inflation of a coin nothing, if this has lost much of its value in the end and you have indeed brought out your capital of the respective coin back, but this is not worth anything in the market. Now, in reality, you have not reached the break even. This means that you get less Bitcoin or Fiat currency for the number of Coins you own than you acquired at the beginning.

Another important factor for the return on investment is the number of master nodes of the respective block chain. When fewer masters of one coin work in the blockchain, the payment frequencies tend to be shorter and you will be paid for the work in less time. As the number of Masternodes grows in the blockchain, the payments will arrive at a later date. There are only a certain number of blocks daily, which can be calculated by the block time. The blocks are divided by the number of Masternodes, meaning that each Masternode gets assigned a fixed block and the percentage of the block rewards.

In the last section, we return to the block returns, which play an important role in the return on investment. What you see again and again is that many investors do not factor in a Block Reward Halving before investing. It is important to understand that block returns will become less over time so that inflation can be lowered. As a result, the "return on investment" will continue to move backwards, since, logically, the yields in the blocks will be reduced. When deciding on a coin, you should always know exactly when the next block Halving is due and how high that percentage will be.