What Is Gas?
Gas refers to the fee that is paid on the Ethereum network in exchange for utilizing the computational power of the platform. Activities such as launching decentralized applications (DApps) and conducting simple transactions like sending ETH between traders require gas. This fee is paid using Ether (ETH), which is the native currency of the Ethereum platform.
Gas is consumed in small units known as gwei. One gwei is equivalent to 0.000000001 ETH. The amount of ETH paid in a single transaction depends on the resources needed to complete the transaction on the Ethereum Virtual Machine (EVM) and the level of congestion on the blockchain.
The introduction of transaction processing costs on the blockchain was intended to facilitate the calculation of resources utilized during transaction execution. This differentiation helps distinguish between computational costs and the digital currency itself.
In addition, the implementation of transaction fees for every transaction helps prevent spamming incidents by malicious actors, thereby enhancing the security of the network. Ethereum users can utilize ETH Gas Station to estimate their gas costs. However, it is important to note that lower-priced transactions may take longer to be processed, as miners prioritize transactions with higher fees due to the increased earnings associated with them.
To illustrate this concept, let’s consider an example of transferring funds between traditional bank accounts. James transfers $500K from his account to Susan’s account and pays a $5 fee. In the context of the ETH-powered network, the total amount of ETH involved in a single transaction is equivalent to the lump sum from James’ account, while the $5 fee represents the gas charged to facilitate the transaction.
It is worth mentioning that gas on the Ethereum network should not be confused with GAS on the NEO blockchain. On NEO, GAS functions as its own currency, whereas on Ethereum, it represents the cost associated with transaction execution.
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