In short: “A blockchain network needs some form of energy to keep going, and this energy is usually the computational power that will help users complete orders. That energy is called gas or gas=fee. For the Etherium network the gasfee is measured in GWEI”
Bitcoin and other first-generation cryptocurrencies allow the transfer of currency from one person to another, but they do not support the addition of some transactional conditions. However, the case differs for the second most popular cryptocurrency Ethereum, and Ethereum gas makes the real difference.
As said for the Etherium network it is called GWEI. Gwei wei is a portmanteau (a blend of words) of “Giga” and “Wei”. The name Giga is derived from the Greek word γίγας (gígas), meaning “giant. In a prefix it means one billion (1,000,000,000 or 109) • a gigabyte is one billion bytes. The name Wei is of Chinese origin. The meaning of Wei is “power, strength, towering, lofty, great, mighty”. To me that sounds like an oxymoron (contradiction in terms).
Put simply. 1 Gwei is 0.000000001 Ether (1 billionth of an Ether) that is used to measure the cost of transactions on the Ethereum network. These transactions include crypto swaps, exchange, trading, crypto transfers, among others. The gas concept helped to distinguish between the actual value of the ETH crypto and the cost of computational power used to validate transactions on the Ethereum blockchain. Over time, gas fees in crypto have become a synonym for network fees charged to users to validate transactions on other blockchains.
Gwei here is a unit of Ether to measure the cost of what is called “gas”. Tokens thought of as “gas” tokens are those that are spent to take action on the network. They are the gas that makes the network function. Lets say you are executing a smart contract on the Ethereum network, that involves a good amount of processing power. You need miners around the world to spend time and electricity validating your contract and its operations. To facilitate this process, you will pay a bit of Ether or “gas” to the miner who mints your transaction into a block. Here you paid a bit extra to get your transaction processed.
Transaction prices for the Ethereum network vary over time as miners join and leave and as the price of Ether moves up and down. Its key to note here that the miners themselves take the price that you pay, incentivizing them to pre-select for transactions that promise a high payment.
How to compute gas fees?
The fee you will pay for your contract’s execution is not a simple fixed value as discussed before. Just as the market can adjust the price of gas as market demands change how much capacity the network is running at and thus prices, contracts themselves can contain various complexities. A simple contract will take vastly less computational power compared to a more complex contract and this is factored into the overarching gas price.
Each operation taken by a smart contract has an associated gas cost. Below is a chart taken from the Ethereum yellow paper that outlines the breakdown of these operations:
When a contract is executed, each operation is recorded and its gas price is tabulated. The total is the Gas price for the transaction.
How do I pay for my transaction? And how much is the gas bill?
Gas is not equal to Ether. Gas itself has a market rate as discussed above. Miners will select incoming transactions they benefit the most from processing because their the ones who gain the transaction costs.
The key take away here is:
The market will set the Gwei price per Gas for transactions to actually be processed. If you pay more per unit of Gas, your transaction will be processed faster as more miners want to include it in their blocks. If you pay less, your transaction will be less likely to be included, take longer to process, or quite possibly never be processed at all,
You can view some historic data here:
Prices will fluctuate anywhere from 2 or 3 Gwei per Gas, up to periods of peak transactions where the network guzzles 100+ Gwei for Gas. Submitting a transaction paying 5 Gwei per gas during peak hours will likely take hours until the network calms down to be included in a transaction. Most online sites that report on gas prices will display prices in 3 different time ranges like “SLOW – 25 GWEI – >5 minutes”, “REGULAR– 60 GWEI -<2 minutes” and “FAST– 125 GWEI –> ASAP”.
You can check out the ETH Gas Station,
This indicates how long it will take for your transaction to be included if you pay the given price at the given time. These are estimates though and are never guarantees. To get a better sense of all this, if we say Ether is ~ $2000 USD, Gas prices are ~ 100 Gwei, and your transaction costs ~ 2100 Gas, you can expect to pay about $3 to get your transaction through.
Not cheap huh. Certainly your 100 Gwei is a high Gas price, but it can be quite costly in general. However, there are exciting changes in the works for Ethereum that will hopefully slash these gas prices!
Thanks to: “Geekculture“