Gas
What Is Gas in Crypto?
The term
gas refers to the
pricing mechanism used on blockchain networks like
Solana and
Ethereum. Such a mechanism
calculates the costs (fees) for performing a transaction or executing a
smart contract operation.
How Does the Gas System Work?
Let’s take Ethereum’s gas system as an example. While ether (ETH) is the currency that fuels the blockchain, gas is a special unit that is used to measure how much “work” (computational resources) a certain task requires. Naturally, demanding tasks will have a higher gas cost than operations that require less computational resources.
Note that fees are still paid in ether (ETH), but gas and ETH are two different things. While computational tasks are measured in terms of “gas cost”, each unit of gas has a “gas price” that is defined in ether (ETH). As such, every transaction has a particular “gas price” for each unit of gas.
In other words, the
gas cost is the amount of work, and the
gas price is the price paid for “each hour” of work. The relation between these two, along with the
gas limit, defines the total fee for an operation or transaction.
Should I Pay Higher Gas Prices?
It depends. If you are not in a rush and if the network is not busy, you can probably go with regular gas prices. But if the network is busy or you just want your transaction to be validated quickly, it makes sense to pay higher gas prices.
Higher gas prices will incentivize validators to verify your transaction first than others. Similarly, setting a low gas price can cause your transaction to be stuck as validators won’t have the financial incentive to validate it.
What Are Wei and Gwei?
On Ethereum, the gas prices are made of very small numbers, so they are usually expressed in “gwei” instead of ETH. 1
Gwei is equivalent to 0.000000001 (or 10-9) ETH or 109
Wei. Wei is the smallest denomination of ether.
Conclusion
The gas pricing mechanism is important because it guarantees that fees are being charged in a fair and appropriate way. In a way, it helps prevent resources from being wasted on operations that are not valuable to the blockchain network.