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In July 2022, Ethereum publicly shared that it expects to merge Ethereum's mainnet with Beacon Chain in September 2022. After the announcement Ether has spiked more than 10% which means higher gas fees. Gas fees are an inevitable and frustrating experience for many when investing in cryptocurrency. Unfortunately, the more popular the platform, the higher the gas fees will be because of congestion on the. That same month, Ethereum’s fees fell to the lowest they’ve been in over two years with the average cost of a transaction dropping to 0.77 ETH. While gas fees can’t be fought, they can be better understood so that investors have the clarity they need to invest and conduct transactions without losing too much. This article will discuss gas fees, how they’re calculated, and whether or not you should choose a blockchain network solely based on gas fees.
Terms to know
- Gas: Gas is the computational effort required to process actions on a cryptocurrency network.
- Gas Unit: A gas unit is a single amount of computeration effort required to process actions on a cryptocurrency network.
- Gas Fee(s): Gas fees are used to compensate blockchain miners for the computing power used to verify blockchain transactions.
- Miner: Miners protect the network from attacks, prioritize computations, and pace the amount of requests coming through the blockchain at a given time.
- Minting: Creating new crypto coins using a proof-of-stake (PoS) consensus algorithm.
- Gigawei (GWEI): Gwei is the smallest Ether unit base and is equal to 0.000000001 ETH.
What is gas/gas unit?
Gas is the computational effort required to process actions on a cryptocurrency network. Gas describes the tax that’s used to process a transaction on the blockchain network. Gas units add up when you request different transactions on the network because it measures the amount of work being done.The heavier the transaction, the more gas required, and the higher the gas fee will be.
The formula for gas fees is:
Total fee = gas units (limits) x (base fee + tip)
Tips may increase the priority of your transaction, so that the amount of time miners take to process your transaction is shorter.
What are gas fees and who are miners?
Gas fees are used to compensate blockchain miners for the computing power they have to use to verify blockchain transactions conducted by miners. Miners protect the network from attacks, prioritize computations, and pace the amount of requests coming through the blockchain at a given time. Without them, no computations can be made. Miners need to be compensated to keep the network going and prevent viscious or fraudulent attacks from happening on the blockchain.
How are gas fees calculated?
The price of gas fluctuates because it is based on network congestion, or how many nodes are on the blockchain at once. NFT Now defined the main factors for blockchains’ gas fees as “block time (the time required for the respective blockchain to generate new blocks) and transaction throughput (how many transactions a single block can process).”
The formula for gas fees is:
Total fee = gas units (limits) x (base fee + tip)
Tips may increase the priority of your transaction, so that the amount of time miners take to process your transaction is shorter.
Should you choose a network solely on gas fees?
Gas fees have a huge impact someone’s decision on a network. Exorbitant gas fees could be detrimental to someone’s investment, whereas, if you’re a miner, then choosing a network with high gas fees will be an opportunity to make more money. Choosing a platform with little to no gas fees is a smart investment option to optimize your investment, especially if you are just starting out or don’t have much money to lose.
