Gas, as the name suggests is literally a fuel of
Gas, as the name suggests is literally a fuel of the Ethereum network and in order to initiate or complete any kind of activity on the ethereum network, a certain amount of Gas will be consumed in the process. Gas basically determined the activity fee which is converted into Ether and you pay that amount.
In cryptocurrency space, most of the tokens are earthed through the mining process and every transaction verification is done by the miners. So, even if you initiate a transaction and it fails, you need to pay a certain amount of Gas as the miner fee
Every Ethereum user has a certain gas limit and they need to operate within that limit. If the term Gas still sounds confusing, let us take a real world example to understand the term even better.
Take cars, for example, every car needs a fuel either petrol or diesel to function, and each car has a limit up to which they can fill their fuel tank. Now the amount of fuel you put in is dependent on two factors, the limit of your fuel tank and the price of the fuel.
Coming back to the ethereum network, consider the Ethereum network as your car, and the ‘Gas’ is the fuel to function on the network, and you can indulge in various activities until you haven’t reached the Gas limit.
In this article, we will look into the ‘Gas’ in a detailed manner and try to understand how it affects the activities on the Ethereum network.
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Understanding Gas on the Ethereum Network
If you have been in the crypto space for long, you must have heard of the term, Gas along with the Ethereum network. You can think of Gas as a universal parameter on the Ethereum network which determines the miners’ fee or any transaction fee on the network.
Transaction Fee(TX) = Gas Limit *Gas Price
Any transaction fee on the Ethereum network is determined by using this formula, where the gas limit has been defined depending on the activity you have undertaken and then that is multiplied by the price that has been set for the Gas and the equivalent is then converted into Ether.
The TX fee is not the actual transaction fee which we pay for transferring a certain amount of ETH to an address, but the TX Fee is actually for the miners, who are responsible for transaction verification and maintaining the decentralization aspect of the public blockchain.
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What is Gas Limit
Just like your car has a fuel tank limit and you can fill in only that max amount at a time, similarly the Gas limit on the Ethereum network are predefined for each activity, and you cannot necessarily lower that, as you might receive a Gas error. 21000 is the gas limit for normal transactions.
However, the unused Gas will always be returned to your account on a successful transaction. Let’s say you have put in 40,000 Gas for transferring 1 ETH to a certain address, if your transaction gets successfully validated, your account will be refunded with 40,000 – 21,000 Gas.
However, if your transaction fails to complete for any reason, you won’t be refunded any amount of the gas.
What is the Gas Price?
The price of the Gas you have put in is determined by the speed of your transaction, i.e its variable and totally depends on the network and miners validating your transaction. So, if you lower the prices of Gas, the transaction might get delayed. Let us look at certain scenarios which might make you understand how Gas price works.
Under Normal circumstances,
- 40 GWEI Gas Price will almost always get you into the next block.
- 20 GWEI will usually get you within the next few blocks.
- 2 GWEI will usually get you within the next few minutes.
The Gas price is fixed at 50 GWEI, so that users who generally don’t bother to read instructions, do not increase the price and get a failed transaction in return.
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How Increasing or Decreasing the Gas Price Affects the Transaction?
The Gas is used to determine the transaction fee or miners fee who validate the transaction on the network. A miner can select any transaction at random or according to their will, so if you want your transactions to be included, you must ensure that you have set a good Gas price which might persuade the miners to validate your transaction first.
Miners generally select the transaction in a top to bottom approach, i.e the transaction providing highest Gas fee will be mined first and then the rest will follow the suit as per the gas price set by the owners.
If you are in dire need to validate your transaction at earliest, you can set the prices a little higher, so that the miners pick your transaction over the others. However, if you are not in a hurry, you might put a price that will ensure that the transaction is picked up by the miners even if not at the top.
Final Thoughts
The gas on the Ether network is the real source of computational activity on the network, and it does the same work as the name suggests. However, you have the authority to set the Gas price while the network has predefined gas limits for any kind of activity.
You can increase or decrease the gas prices depending on your need, if cost saving is your aim, then set the gas price low enough that the miners pick it for validating, if you are in a hurry and time is your main concern, then set the prices high enough so that your transactions get picked up over the others.
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