The word Gas is used to refer to many things, from natural gas, to gasoline, to the air we breathe and even the fees on the Ethereum blockchain. This commodity touches nearly every aspect of our lives. It’s being used every day for electricity, manufacturing, transportation and products. However, the cost to procure this commodity is gradually becoming more and more expensive.
Regular gasoline for example, has increased over 40.8% (per gallon) since January 2021 where prices were $2.259 to November 2021 where prices are now approximately $3.18. Natural gas has seen 103% increase (per Million Btu) from $2.71 in January 2021 to $5.51 in October 2021.
As most crypto enthusiast already know, one of Ethereum’s main use case is to allow smart contracts to be built on the Ethereum blockchain. Click the link for an intro to Ethereum . Smart contracts are basically simple computer programs that facilitates the exchange of any valuable asset between two parties. Smart contracts could be shares, property, money or any other digital assets, like QBUX and Intercoin that you want to exchange.
The word Gas is used to refer to the fee or the pricing value required to successfully execute a contract or conduct a transaction on the Ethereum blockchain. This price is set by the Miners as a rewards mechanism to process a transaction faster and is denoted in Gwei, which itself is a denomination of ETH. Gwei means giga-wei which was named after Wei-Dai, a computer engineer known for his contributions to cryptography and cryptocurrencies. A single gwei is equal to 0.000000001 ETH (10-9 ETH). For example, instead of saying that your gas costs 0.000000001 ether, you can say your gas costs 1 gwei.
The gas market price is determined by the demand for resources on the network. The amount of gas you need depends on how large of a transaction you are trying to execute and how fast you want it executed. The longer you wait, the less you pay and vice versa. This is explained further in the video below. In Feb 2021, the gas price went as high as 376.8 Gwei according to YCharts .
Users can set a gas limit per transaction. This indicates how much gas fee they are willing to spend on that particular transaction. Any gas that was not used during the transaction is returned to the user. The gas limit is also used as a means to safeguard against bad actors wanting to spam the network. This will prevent any accidental or hostile infinite loops or other waste of computational resources due to unoptimized code.
watch live Ethereum Gas Price Chart website