Gas fees: what are they? What are gas fees in the crypto world?
Summary:
Do you always hear about gas fees regarding cryptocurrencies and don't know what they are? In this article, we explain what gas fees are and how they work.
What are gas fees?
Let's start with the definition.
Gas is the unit of measurement used to calculate the "gas fee" the rate necessary to conclude a transaction or to execute Ethereum smart contracts .
Obviously the "gas" we are talking about here has nothing to do with the gas we use for heating or cooking.
This fee is used to remunerate miners who verify transactions on the blockchain by offering the computing power of their machines.
Gas is usually expressed in Gwei (or nanoether ), which is equivalent to one billionth of Ether .
The concept of simplified Gas Fees : by gas fee we mean the commission (the cost) required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform.
In summary: what are the gas fees?
Gas fees are commissions that are paid by users to reward the energy expenditure required to process and validate their transactions on the Ethereum blockchain.
What is the gas limit?
The “gas limit” corresponds to the maximum amount of energy (in “gas” units of measurement) that a user is willing to spend on a given transaction.
A higher gas limit means you need to do more work to execute a transaction using ETH or a smart contract.
How much does a Gas Fee transaction cost?
The exact price of the gas transaction is determined by supply and demand among the network's miners.
In essence, miners, i.e. those who have to process the transactions requested on a blockchain, can refuse to process a transaction if the gas price does not reach a certain threshold, which they consider profitable for their work, and network users who they are looking for processing power.
Why was the concept of Gas Fees introduced?
The concept of gas was introduced to maintain a value that exclusively indicates the computational expenses on the Ethereum network.
This separation allows for a practical distinction between the actual cryptocurrency (ETH) valuation and the computational cost of using Ethereum's virtual machine (EVM).
Each transaction, in fact, is a sort of program that indicates to the Ethereum Virtual Machine (EVM) the actions to be performed to move funds from one wallet to another or to execute a smart contract.
Each of these operations has a cost: a "tax" that must be paid to miners to provide them with an incentive to continue to perform these operations.
Therefore gas corresponds to the unit of measurement of the transaction fees of the Ethereum network.
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