If you have ever heard about Ethereum platform, you might have also heard about Ethereum Gas. So, what is Ethereum Gas? In today’s article, we will explore more about it.
What is Ethereum Gas?
Ethereum Gas is the basic unit of any computation effort that is taken to execute operations within the Ethereum platform. This means every operation including smart contracts execution, simple transaction, etc. require some Gas to be spent.
In simple words, it is the fees that need to be paid for an operation to be completed on the network.
However, before we dive deep into Ethereum Gas and its workings, let’s try to understand what is Ethereum?
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What is Ethereum?
Ethereum is a platform which is built on top of the blockchain. It is built as a decentralized network where developers can build Dapps and write smart contracts. It is similar to internet plus the advantages offered by blockchain. As it is decentralized in nature, it consists of nodes. The nodes, in return, takes part in the building consensus on the network. They use different consensus algorithms such as Proof of Stake(PoS). Ether is used to power the system. Read it more about here.
Users can access Dapps that are built on Ethereum and interact with it just like they interact with apps on the web. This leads us to an interesting concept of Ethereum Virtual Machine(EVM). Let’s explore.
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Ethereum Virtual Machine(EVM)
To ensure that operations are executed with stability and accuracy, EVM is used. This means that if you send a transaction to your friend, it will be executed within EVM. At first, the transaction will be listed on the Ethereum network which would require the operation to get completed. This is where the concept of “Gas” comes in. Without Gas, it won’t be possible for the transaction to execute. Also, the amount of gas required depends on the complexity of the transaction. The more complex the transaction is, the more gas would be required to execute it.
A transaction can require multiple operations and hence the total gas required is calculated as the sum of all the operations.
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How Is Gas calculated?
Gas is calculated regarding Ether or ETH. As Ethereum platforms ether to fuel its transaction, it is obvious that gas needs to be calculated accordingly. Also, the Gas once spent cannot be recovered even if the transaction fails.
So, how it is calculated. It is calculated with a simple formula of TX fee = gas limit * gas price.
The prices can be both in ETH or in USD. The transaction fees(TX fee) is paid to miners for putting computational operations and solving a block of transactions.
As we already said, it consists of two components.
- Gas Limit
- Gas Price.
Also, if you hear someone just say “Gas,” they mean to say that “Gas Limit.”
Let’s go through an example to understand how it works with the help of an analogy.
The gas limit is equivalent to the car’s capacity to hold the gas or fuel in this case. Now, the gas price is simply the cost of the car’s fuel.
Now, it will read as $15.00 per gallon unit for the car. Similarly, for 20,000 gas, it will be 40 GWEI per gas.
With the above understanding, we can calculate the total transaction fee of a transaction.
Transaction fee(TX) = gas limit * gas price.
Gas Limit is set for each transaction to ensure that the Ethereum platform remains stable. This means you can spend a limited amount of gas. It is also done to ensure that no one pays a lot of Ether or ETH for a transaction.
Similarly, the user can also set a lower gas limit and let the transaction carry on. But, be wary of how much you lower the gas limit. If you do it too much, the transaction will run “Out of Gas.” This will make your transaction fail.
The Ethereum network also ensures that unspent gas is returned to its owner.
Gas Price is the price per unit of gas. You can set the gas price of each transaction. However, if you do so, your transaction will take more time to complete compared to a transaction that used higher gas price. The gas price keeps changing according to the network. You can check it on Ethgasstation.com. We always advise using the gas price close to what’s shown on the website.
Any modern Ethereum wallet, let you set the Gas Price and Gas Limit. We recommend MyEtherWallet and MetaMask for better secure transaction handling.
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This brings us to the end of the article. If you still think that something is missed, don’t forget to use the comment section below.