Gas (Ethereum)
Gas (Ethereum) — is a denominated unit of ether used to pay for transactions on the Ethereum blockchain. In other words, this is the price an individual pays for a transaction in a block. Ethereum is interconnected with a network of computers that store and process all transactions on Ethereum. At the same time, these functions are supported by smart contracts that were created for conducting trades, including the transfer of funds and settlement without intermediaries. Gas is necessary to make this system function.
What is Gas (Ethereum)
Gas is a unit of measure for the computational work of transactions or smart contracts performed by miners at their own expense to keep the Ethereum network running. One unit of gas separates the computational cost of the Ethereum network from the ether. These units are immutable, they depend on the final values that the miner used to complete the transaction. The used gas is directly proportional to the complexity of the transaction.
Before paying miners, it is necessary to calculate the amount of work done by Ethereum. The calculation is carried out in gas units, which are assigned to all system operations. At certain times, Ethereum can only act on a limited number of gas units. This is why miners have to keep track of large volumes of requests in the system. Without this, the system is subject to overloads from unrestricted usage or spam. Miners rely on cost and gas limits to prioritize tasks.
A gas limit is an assumption about the total amount of work required for a given request. This task is quite complicated, so miners use special applications for calculating limits. Usually, 21,000 units of gas are enough to fuel most transactions.
If the limit is low, the transaction won't be completed on time, and the miner will lose ETH. If the request is processed before the limit is reached, they will receive back unspent ETH. Gas limit protects miners against loss of funds.
What is the Price of Gas (Ethereum)
The price of gas is the cost of ether per unit of gas to pay. The gas price is determined in gwei or wei. These are units of measurement in the metric system of Ethereum, where each denomination has its name. Often this denomination is called the base unit of ether. The smallest of them is wei. Gwei is one of the most popular Ethereum denominations. The whole system includes seven denominations: wei, kwei, mwei, gwei, twei, pwei, and ether.
Unlike the gas limit, miners can set the value to adjust the speed of trade confirmation. This value can be set manually, or a miner can choose the recommended one using special sites.
In most cases, the payment is taken from the sender's wallet. Thus, for the transaction to be confirmed, a miner needs to have an amount greater than the one that should be sent. The rest will be used to cover the fee for the resources of the Ethereum Virtual Machine and measure the computing power in this network.
Two main reasons make the price of gas grow:
- When many transactions accumulate, miners check transactions more selectively, giving preference to those that have the highest reward.
- Users are starting to set a higher gas price to get their transactions confirmed as quickly as possible.
Thus, when the network is congested, transactions become slower, and the effect of the auction makes the cost of gas rise as well.
Importance of Gas (Ethereum)
Gas is an essential thing for the Ethereum network. The concept of using gas allows Ethereum to separate the computational costs of the Ethereum Virtual Machine (EVM) and the real value of ETH. The Ethereum network combines more functions than a regular cryptocurrency. ETH can be used to send cryptocurrency transfers between users, but the main purpose of Ethereum is to create and maintain smart contracts.
The second reason is to stimulate miners. A lot of decentralized applications are deployed on Ethereum smart contracts, which combine a variety of areas: games, insurance, finance, real estate, etc. Such a network requires special protection, and in the case of blockchain networks, the security of the network is directly proportional to its computing power (number of miners).
To stimulate miners and offer them attractive earning conditions, a gas system was introduced. With its help, miners can receive a commission commensurate with their resource costs, because the more complex the transaction, the more gas it will take to complete it.
Gas (Ethereum) is necessary to carry out every operation that requires the commission:
- make ETH transfer to another wallet;
- create the smart contract in the Ethereum blockchain;
- effectuate the smart contract in the Ethereum blockchain;
- pay for the data storage.
Such a commission is necessary to protect the data from malicious users. If there were no commission payments in the network, a malicious user could easily disrupt the network, without any consequences, initiating an endless cycle of computational actions through a transaction. Thus, fees also protect the network from deliberate attacks.
