Beginners guide to Ethereum gas fee

Beginners guide to Ethereum gas fee

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The ethereum blockchain is by far one of the largest blockchain ecosystems in the world and it native cryptocurrency Ether is second only to bitcoin according to market capitalization. The Ethereum blockchain platform allows for building Decentralized finance applications dapps,NFT(non fungible tokens) and many other kinds of applications to be built on it, but there exists a cost for every computation carried out the ethereum blockchain network known as gas.

Gas commonly refers to the cost required to carry a computation on the ethereum blockchain network,it also refers to the cost required to carry out a transaction on the network. Let's draw an analogy assuming Mr x wants to transfer $200 to Mr y account ,there may be some extra amount in processing fee for that transaction to occur,the processing fee exists because the bank which provides the infrastructure for the transactions to take place needs to make some profits out of the transaction.

In the analogy above the $200 is the amount to be transacted while the processing fee refers to the cost of carrying out that transaction, this is quite similar to what happens in the ethereum blockchain. In the ethereum blockchain the processing fees are referred to as gas fees which are measured in small fractions of ethers called gwei. Gwei is the smallest denomination of ether,similar to how traditional currencies can be broken down into several smaller denomination,in this case 1 Ethers is equivalent to one billion gwei(1000,000,000) and One Gwei is the same as 0.000000001 ETH, if a transaction cost is 0.000000050 ETH, you would say that the cost was 50 Gwei. The value of gwei varies from time to time based on the current price of ethereum.

Gas fees incentivizes or encourage miners for their computational resources towards processings and verifying transactions on the network. If the gas price is low miners can choose not to take note of the transaction, which means the higher gas price on a transaction act as an incentive to the miner for your transaction to be included in a block. Gas fee helps in keeping the ethereum blockchain safe,by demanding a fee for every transaction, it keeps away spammers from the network, it also prevents computations which can put a strain on the network by requiring a fee it prevents users from overburdening the network.