Short brief about Ethereum
Ethereum is a platform were anyone can secure there money in a digital decentralized technological way, not only secure in terms of keep, but also you can transfer, trade, borrow and lend crypto. Ethereum has it's own crypto coin named ether.
It natively supports smart contracts, the essential tool behind decentralized applications. Many decentralized finance (DeFi) and other applications use smart contracts in conjunction with blockchain technology.
What is Gas fee
So the word gas resembles the gas stations, where your automobile needs a gas to refill energy, so like that Ethereum charge a gas fee so that your transaction could be done in more safe and fastest way.
Now you might have this question in your mind -
To whom does this gas fee has been paid ?
The clear cut answer for this is the miners. So miners are basically tracks your status of your wallet and update your account if there is anything debited or credited. Not only that, they have to insert the smart contract in the block chain and then updates that with the previous hash number and time stamps.
So let me take an example for the fee concept, suppose you went to a coffee shop, there is a waiting line where you have to wait for your turn. But there is a policy in the shop. Suppose the coffee cost around $10, with that if you pay extra $3 then you don't have to wait in the line. You can get the service instantly. This works same for the Ethereum, you have to pay the miners extra fee which is named as gas, and they will make your job done asap. 🚀🚀
Now there are some certain edges that you need to know, gas fee often gets changed, it depends on the server, if it's too busy then it charge high, vise versa. But the point that to note is, gas fee never change according to the transaction amount, if there is a $2 of gas fee for $30 transection, it will charge same for the $30000 transaction.
How much it truly cost 🤑
To find it out, we need a formula to get it done
The formula is- Gas Cost * Gas Price
Here gas cost is a cost which every transaction have to pay that amount any how. But the rate will never change, if it cost around 21,000 gas for each transaction and 4000 gas to check the wallet, doesn't depends on the transaction, whether it's millions of dollar transferring or 1 penny is transferring.
And now we have gas price. It often get changes just opposite of gas cost. Here gwei comes into the picture.
What is Gwei
Gwei is a terminology that is used in cryptocurrency community, which is the 4th smallest unit of Ether to measure the cost of what is called “gas”. Basically these gweis are responsible that makes the network function. This gwei has been created by a crypto analysis- Claude Shannon, also known as The Father of information theory.
So 1 Gwei = 0.000000001 Ether (which is also called to be 1 billionth of an Ether).
Let's see how it's been calculated for each transaction.
Let's assume that average price of gas cost around 100 gwei then the cost of the transaction- => 21000 (gas) X 100 (gwei) => 21000 X 0.000000100 => 0.0021 Ethereum
If you wanna calculate how cash that is-
Just multiply=> Amount of the Ether X Current price of the Ether
Which is here => 2000 X 0.0021 => $4.2
So if we merge this two formulas, and say like, the total fee transaction for each is-
=> Price of action in gas X Cost of gas X Ethereum price in $/INR
Note: The value of Gwei may rise if the server get too busy.
Conclusion
So this is it. I hope you gathered some knowledge by reading this blog patiently. Thankyou for reading. If you like my blog please like and share.
Comment down below if you know the answer- What is the zero gas fee Bitgert blockchain
