A Masternode is an important component of the privacy-enhanced cryptocurrency. Masternodes are dedicated servers on the Internet that enable instant transactions and perform the trustless anonymization of users' funds. Masternodes require a certain amount of coin as collateral, a secured server, a full-time Internet connection, and periodic updates.
For those that can’t afford to purchase the full amount of coins that are required to run a Masternode. Masternode shares allow users to accumalitively meet the coin requirement of a Masternode. This is achieved by utilizing a 3rd party service that pools together the funds and sets up the Masternode for the shareholders. The service provider then divies up the Masternode rewards and pays it out to all shareholders of that masternode.