EZ Wallet 101: Gas Fee, Gas Limit and Gas Price: Understanding Transactional Costs on the Blockchain
Welcome back to EZ Wallet 101, the all-and-everything Web3 and blockchain series of EZ Wallet. In this article, you will learn more about NFT and how they work, and how the transactional costs are calculated when working on the blockchain.
⛽ What is Gas?
Even though blockchains work in a decentralized manner, nothing is free, and blockchains have to find a way to reward the network that operates and verifies transactions. The advantage of decentralized technology is that even though there is a cost because it works in a decentralized way, validators can earn for operating the network but don’t have a centralized authority to gouge and overcharge the same way banks and other networks do.
On the Ethereum blockchain, gas is the fee needed to successfully transact a contract on the platform. The gas then pays the validators a fee to cover the resources needed to run the network, with the price of gas being determined by supply, demand, and network traffic at the time of a transaction.
What is a Gas Fee?
💸 What is a Gas Fee?
The gas fee is what you pay to transact on Ethereum, with the gas fee being comprised of two things:
- Gas Limit: The maximum amount of gas you’re willing to pay to transact.
- Gas Price: The amount you want to pay per unit of gay as a fee.
The cost of transacting is set automatically by Ethereum. Even if you set your Gas Limit very high, you will only be charged for the actual computational costs. Gas price on the other hand often fluctuates depending on how busy the network is. When you set a higher Gas Price, your transaction will be processed sooner. The lower a user estimates their Gas Limit, the lower priority that transaction will receive. The Ethereum validators then are awarded this fee for staking their ether and verifying new blocks on the chain.
🔗 Gas Fee and NFT
Despite growing competition, Ethereum remains the most dominant blockchain when it comes to NFT. It has some of the most popular NFT projects (BYAC and Cryptopunks), NFT artists (Pak and Beeple) and NFT marketplaces (OpenSea).
Gas fees, therefore, are a very important part of NFT investing and selling since all transactions on the blockchain need transactional costs. Previously, Ethereum required exorbitant amounts of energy to operate, using the proof-of-work consensus mechanism. This meant that gas prices fluctuated unpredictably, at times being cheap and efficient, and at other times making transacting on Ethereum cost prohibitive. This led to the monumental yet complicated “Merge” in which Ethereum switched over to a proof-of-stake concept to help alleviate gas fees by lowering energy consumption (by 99%!). Regardless, anyone transacting on Ethereum needs to understand the transactional costs of working with one of the leading global blockchains, allowing users to maximize their investments.
🌟 EZ Wallet and Gas Limit Recommendation
EZ Wallet is a new type of crypto wallet, one that provides an easy-to-use interface that provides beginners with the tools they need to start investing, with advanced features veteran traders need. One such feature is the “Gas Fee Recommendation.” This advanced feature analyses the network and traffic patterns, allowing users to maximize trading profits by taking gas recommendations from EZ. This allows traders to find the buy times to transact on the network, without spending unneeded time calculating costs. This is just one of the ways EZ Wallet is working to make crypto trading more effective in ways every type of user can understand.
What do you think about today’s post? Don’t hesitate to comment and share your thoughts, and stay tuned for the upcoming post!
📝 About EZ Wallet:
EZ Wallet is on the journey to make crypto more accessible and convenient for everyone, from the crypto newbie to the seasoned crypto vet. The EZ Wallet team is a diverse and dynamic team aiming to create a non-custodial wallet that makes everyone’s journey into the crypto world easier, with a more friendly interface that simplifies the Crypto process while simultaneously pushing the boundaries of what advanced features a digital wallet can provide.
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