Gwei
Gwei was formed from parts of two words - giga and wei. The term refers to a small denomination of ether (ETH), which is the native currency of the Ethereum blockchain. Ethereum is a platform for purchasing and offering goods and services built on decentralized blockchain technology.
Gwei is equal to 1,000,000,000 Wii, which is the smallest possible denomination of ETH (like Satoshi are to bitcoin). Consequently, 1 ETH is equal to one billion Gwei.
Gwei explained
Before we explain what Gwei is, it is necessary to understand the nominal system of Ethereum. Ethereum uses its own metric system. Each denomination has its own name. The smallest one is called wei. It is also defined as nanoether or the base unit of ether. These denominations are useful as they influence the growth of a cryptocurrency's market value and make smaller transactions possible.
Gwei is the most commonly used denomination of ethereum. It usually refers to denotation of "gas" prices. The gas fee is the unit that measures how much a user is willing to pay for a transaction or the execution of a smart contract on the Ethereum platform, and it is measured in gwei. Since these gas fees are tiny, it makes no sense to label them as ETH.
Every transaction on the Ethereum platform is processed by a miner. To validate a transaction and carry it out, a miner spends a certain amount of energy and power of his computer. So, gas means a unit of work that a miner must do to include a particular transaction into a block.
It should be noted that Ethereum is always developing. That is the reason why many denominations that are not included in the yellow papers are presented on the platform.
What are ether denominations
There are many units of the ethereum cryptocurrency, for performing small operations with it. Every unit was called in the name of a person who directly or indirectly influenced the creation of it.
There are also nicknames that are common among fans and users:
- Wei (wei). It was named after Wei Dai, the "godfather" of the crypto movement, who came up with many of the concepts that underlie the cryptocurrency. He is famous for the creation of B-money as well.
- Kwei (cabbage). It was named after Charles Babbage, an English mathematician who was the first to invent a programmable computer.
- Mwei (lovelace). It was named after Ada Lovelace, the English mathematician who wrote the first computer program for Charles Babbage's computer system.
- Gwei (shannon). It was named after Claude Shannon, an American mathematician who was known for laying the foundations of information theory.
- Twei (szabo). It was named after Nick Szabo, a computer scientist and a pioneer in cryptocurrency. He is also famous for his research in the field of digital currencies.
- Pwei (finney). It was named after Hal Finney, a famous cryptographer who received the first bitcoin in history from its creator Satoshi Nakamoto.
- Ether (buterin). It was named after its founder - Vitaly Buterin, a young Russian-Canadian programmer. He came up with the idea of creating this project several years before he launched it. In 2013 Vitaly announced the start of the project and in 2014 fundraising for further development began. Vitaly and other developers raised about 16 million ether in a year. He also was awarded a grant of 100 thousand dollars for the project development.
Gwei fees
Miners spend a certain amount of gas when they carry out a transaction and secure the network. They cannot conduct transactions without it. It turns out that the user needs to pay this transaction fee. The standard fee is equal to 21,000 gwei. The fee depends on the complexity of a transaction. The formula used for calculating it: Gas Units (Limit) x (Base Fee + Tip).
