Get to know Gas, Gas Limits, and Gas Fees in Cryptocurrencies
As a ledger that records crypto transaction information, blockchain works with nodes that are an important part there. Nodes themselves are user computers connected to the blockchain network as communication points that can perform various functions.
In the blockchain, there are mining nodes that receive and broadcast transactions into the blockchain network. The transactions are then aggregated into new blocks. When the miner has validated the transaction, the mining nodes will put the transaction into the memory pool where the transaction will wait to be included in a block. The mining process runs using the computational capabilities of the Ethereum blockchain. To perform mining, the miners pay for the computational costs. So that a gas fee is held as compensation for the computational costs.
In this article, Litedex will discuss gas in crypto transactions. There are three gases that you need to know and understand, namely gas, gas limits, and gas fees or gas prices. So, take a good look!
Getting to Know Gas / Transaction Fees in Crypto
Gas is a calculation that represents the cost of action on the Ethereum blockchain. Gas is needed for various activities that run on the Ethereum blockchain from launching decentralized applications (DApss) to simple transactions such as sending ETH to other traders. In addition, gas fees can also help secure the blockchain network. The burden of transaction fees, aka gas fees, can prevent spamming or other fraudulent acts, and reduce waste of computational code, and accidental loop mechanisms.
Transactions that run within the blockchain can be illustrated as a journey. Each trip has a different complexity, depending on the distance traveled, the level of congestion, the terrain traversed, and so on. Well, this gas is illustrated as the complexity of the journey.
In the Ethereum Virtual Machine (EVM), gas is an important element that acts as the driving force for Ethereum independently.
What is Gas Limit?
The gas limit is the maximum amount of gas fees that users can pay to be able to make transactions or carry out other activities that require gas fees. The gas limit is held because there is a maximum limit of available gas units. Gas costs are limited in order to avoid mistakes in transactions or other activities such as making smart contracts.
If it is associated with the previous illustration, the gas limit is likened to a gas tank that holds fuel in a vehicle. Tank capacity can affect how far a vehicle can travel on the gas it has. The larger the size of the tank capacity, then you can travel farther distances.
The amount of gas required in a single transaction is determined by how much code is executed on the blockchain. But if you don’t want to spend a lot on gas fees, you don’t need to lower the gas limit because it won’t help much.
Actually, the gas limit has been handled by the wallet, so you don’t need to worry about it. But you still have to understand the concept, yes.
Also read: WATCH THIS BEFORE START MINING CRYPTO!
Gas Fee and How to Calculate It
In the illustration that has been mentioned above, there have been transactions described as trips, gas as the complexity of the trip, gas limit as a gas tank, and now last is the gas fee as fuel or gasoline.
The gas fee is a rate that users need to pay in exchange for the computing energy used by miners when validating buying and selling transactions or creating smart contracts on the Ethereum blockchain.
According to Ethereum.org, gas fees are expressed in gwei which is the denomination of ETH. Gwei itself is an abbreviation of “giga-wei” which is equal to 1,000,000,000 wei which is the smallest unit of ETH. For each gwei the equivalent of 0.000000001 ETH. so you can name only 1 gwei instead of 0.000000001 ETH.
Gas fee rates are determined by supply and demand between miners and users of the Ethereum blockchain network through an auction process. The higher the gas price that the sender is willing to pay, the higher the priority of their transactions on the Ethereum network because the reward that miners will receive is also high.
To calculate the total gas fee independently, you need to multiply the gas limit by the price. For example, you have 50,000 units of gas limit and a gas price of 20 gwei. The calculation is as follows:
Total gas fee = gas limit x gas price = 50,000 x 20 = 1,000,000
Because the gas fee is paid in ETH, the result is converted to ETH by multiplying by 0.000000001. So the total gas fee you have to pay is 0.001.
Gas Fee Ethereum Expensive, How To Solve It?
Ethereum is one of the most widely used blockchains. Due to a large amount of movement in the Ethereum chain, blocks become full and transaction fees spike as demand increases. That’s what makes Ethereum gas fees expensive. The high gas fee makes users frustrated and often delays transactions until the gas fee drops. In addition, the high Ethereum gas fee also indicates that Ethereum and DApps on the network are interesting projects and have many enthusiasts. Seeing this, Ethereum is upgrading the network to be better and can provide cheaper and faster transactions.
You can also get around to getting a more affordable gas fee. This can be done by way of transactions on weekends because gas fees are usually higher on weekdays. In addition, you can start transactions at off or non-peak hours. Usually, the busy time is between midnight and 4 am EST.
That’s an explanation of gas, gas limits, and gas fees on crypto. Continue to follow our articles so that you understand more about crypto. Don’t forget to visit the Litedex, Instagram, Twitter, YouTube and TikTok websites to keep getting updated information from us!
