Gas is the fee an individual user pays in order to process a transaction on the Ethereum blockchain network. Gas prices are labeled as [ gwei ] , which is a denomination of Ethereum’s native currency ETHER ( ETH ). 

  • 1 gwei =  0.000000001 ETH 

When you pay gas to submit a transaction, you are paying for the computational power required to validate and process that transaction on the Ethereum network. As of now with Ethereum 1.0 network runs on a proof-of-work system, meaning that the computational power comes courtesy of “miners” who use special software to compete for ordering and processing transaction filled on Ethereum blocks. In exchange for their service that was provided, the “miners” are awarded the ETH block transaction fees; supplied via the GAS payment provided by the user who submitted the transaction request. 

Note: Ethereum 2.0 is starting in late 2020/early 2021, which will transition the blockchain into a proof-of-stake system. This shift will phase out mining in favor of staking, at which point stakers who deposit ETH will compete for block rewards and gas fees, not miners. ( LOOK INTO THIS )   

Ethereum Fees ; are not set by the developer or the miners involved with validating the transaction. Instead, Ethereum users send transactions with requested gas prices that they choose and then the miners choose which transactions they want to mine in a block. In this sense, Ethereum gas prices are dynamic and the result of a “agreement” reached between what users bid and what miners accept on a rolling basis. As such, it follows that the more transactions users are requesting at any given time, the more expensive gas prices will be as blockspace becomes increasingly scarce. In extension, transactions sent at higher gas prices will be processed faster than transactions sent at lower prices.

[ Specifically, you can compute the cost of an Ethereum transaction fee at any time by multiplying the current gas price by the current Ethereum gas limit (i.e. gas price * gas limit = transaction cost). ]


When dealing with transactions, the ethereum gas limit is the maximum amount of gas units you are willing to spend on a transaction to be processed. This maximum amount is used to ensure transactions are executed, and since you will not always pay the Gas Limit, any unused ETH is returned to your wallet. 

[ For basic ETH transactions, a standard gas limit is 21,000. ]


Gas is one of the fundamental elements of the Ethereum network. Over time, it seems likely that gas mechanics will be increasingly abstracted away from users. Until then, understanding how gas works and understanding how to approach configuring your own transactions is key for using Ethereum efficiently and effectively.