The gas price in Ethereum is one of the hardest concepts to wrap one’s mind around. Computer nerds tend to handle it just fine, as well as crypto enthusiasts, but for the layperson it’s a bit difficult.
In short, it’s the cost of the network to carry out your transaction. Because Ethereum is a network of smart contracts, it’s a bit more complex than Bitcoin in how it verifies the smart contract you’re trying to send. Depending on the traffic of the network at that given time, you pay a gas fee. Your wallet allows you to define low, medium and fast gas fees, meaning how fast the transaction will go through. If you put a gas price (gwei) too low, the transaction might even fail because no miners will wanna bother with processing it, deeming the reward not worth their processing time and power expended. This is done automatically by settings on the miner’s computer of course, it’s not personal.
Please note that steps are being taken to eliminate the use of gas prices altogether in Ethereum 2.0, though that is still a couple of years away.
But why are gas prices so high?
In short, it’s due to DeFi. Nobody could ever believe how fast DeFi, (Decentralized Finance) would blow up. It has become a multi-billion euro industry in less than 3 years, I believe. All those smart contracts and transactions are happening on the Ethereum network, which was simply not made to handle all this. You have to remember that it’s not just people manually sending each other transactions, it’s also automated bots that try to arbitrage opportunities with thousands of transactions per minute. There’s an insane amount of money and traffic in DeFi right now, and it has sent the gas fees through the roof.
Where can I monitor gas fees?
You can always see an estimate of your transaction’s cost in Ethereum and in time on the Gas Tracker at https://etherscan.io/gastracker
Please note that it might be higher than what’s noted there, for example when it was telling me I’d pay about $40 at a high price, I minted an NFT on OpenSea and spent about $62. That’s because the minting process is a bit more complex of a smart contract than a simple transaction. Still, it was far less than the month before where it was showing me highs such as $120.
Can I determine a transaction’s gas from the Gas Price chart?
The gas price chart is an indicator of the trend on transactions on the Ethereum platform. While the content of a chart may help understand the average amount of gas that a transaction requires to be processed, it still depends on the miner’s choice to process your transaction. However, the analytics for highcharts page can help you determine the gas limit for your transaction.
How do I pay the gas price for a transaction?
The gas fees is valued in a unit of ether, which is the gwei. Since average transactions need a minimum of 21,000 gas, you’ll need to use tokens to pay the transaction fees from your wallet.
Where can I read a thorough explanation of gas prices in the Ethereum blockchain?
There’s an article that explains it nicely here on Cryptopolitan.
Where can I buy Ethereum?
You can buy ETH on all crypto exchanges since it is now the second-most popular crypto in the world. Try Coinbase or Binance.