What are Gas fees?

Find out more about the gas fees on the Ethereum network.

Updated over a week ago

Just like when we pay a fee when transferring money from our bank accounts, we also must pay a fee when we are doing any transactions on the Ethereum network.

You are definitely thinking about a different type of gas when someone mentions it but the term has a different meaning in the crypto world. In the crypto world, gas is the computing effort needed to perform certain operations.

To make a transaction or execute a smart contract, you must pay a gas fee and you are required to do so regardless of the wallet you use to store your cryptocurrencies. The gas fees are paid in ETH and transactions can include everything from sending ETH to a different address, lending crypto, buying NFT's, etc.

In other words, the gas cost is the quantity of work done and the gas price is the price paid per hour of work. Together with the gas limit, these all determine the total fee for the transaction or operation performed. If the transaction is more complex, the gas fee will be higher.

What is gas limit?

Gas fees are expressed in Gwei which is equivalent to 0.000000001 ETH. Gwei may be compared to cents as one cent equals as 0.01 of a dollar. For each transaction, a fee must be specified that you are prepared to pay for the transaction to be completed.

The gas limit is the maximum amount of gas you are willing to pay for a transaction.

Certain exchanges and wallets establish the gas prices and limits automatically and in some situations, the users can set them manually, adjusting to their needs.

The process of one transaction to be completed will be significantly faster if the gas price and gas limit are adjusted to a higher level. On the other side, an extremely low gas price and gas limit would make the transaction take a long time to be confirmed and sometimes even fail.

With all the above being said, it would make sense to pay higher gas prices so that these validators are encouraged to check your transaction first. In contrast to this, a lower gas price will make your transaction to get stalled since validators have no reason and less incentive to check it.

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