Crypto Word of the Week: Gas
Just like your car, Ethereum needs Gas to make it go. It's a critical part of the network, and without it the blockchain would ultimately fail. But Gas is more than a tax or fee. It's a unit that measures the number of computations it takes to complete a specific set of operations on the Ethereum transaction.
These transactions require computation resources (which comes from ETH miners), and those resources exact a fee in order to complete a successful transaction.
The Gwei Fee
Fees are paid in fractional amounts of ETH called Gwei (prounced g-wey). One Gwei is 0.000000001 of one ETH. So instead saying you've paid 0.000000001 ether in gas, you would instead say 1 Gwei. Think of it as different denominations of the dollar. A Gwei allows us to calculate the minimum amount of gas needed to complete a transaction.
Here's an example:
Let's say Boston C! has to pay The Golden Noodle 1ETH for all the awesome admin work he's been doing on ATSTT Discord. In the transaction the gas limit (minimum number of gas units needed for a successful transaction) is 21,000 units and the gas price is 200 Gwei.
Total fee will be: Gas units (limit) * Gas price per unit i.e 21,000 * 200 = 4,200,000 Gwei or 0.0042 ETH
Now, when Boston C! sends the money, 1.0042 ETH will be deducted from his account, and The Golden Noodle will be credited 1.0000 ETH. The remainder, 0.0042 ETH, will go to the anonymous miner for the use of the resources.
More Than Just a Fee
Gas fees do more than just provide resources to get your transactions completed successfully. They also provide security for the network:
"In short, gas fees help keep the Ethereum network secure. By requiring a fee for every computation executed on the network, we prevent actors from spamming the network. In order to prevent accidental or hostile infinite loops or other computational wastage in code, each transaction is required to set a limit to how many computational steps of code execution it can use. The fundamental unit of computation is "gas"." (https://ethereum.org/en/developers/docs/gas/)
In essence, the potential for astronomical gas fees is what prevent bad actors from hacking and disrupting the network.
For more in depth information on gas limits, prices, and what effects the gas prices to rise and fall, check out this 13min. video: https://www.youtube.com/embed/Yh8cHUB-KoU
More Gaseous Resources
Also check out this article for further reading: Gas and Fees
This site provides a great gas calculator if you want to reduce your gas fees: ETH Gas Station
Wherever your ETH takes you, may your gas never run out! Above the sun, and into the future!
The Pied Piper
Live above the sun!
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