What are Ethereum Gas Fees?
When using Ethereum for the first time to buy NFTs, you will very quickly come across the term gas. What is gas? And why does it matter?
Gas is a fee that is required to execute any transaction on the Ethereum blockchain. Buy, sell, or transfer from wallet to wallet, you will need to pay gas. This fee is priced in small fractions of ETH referred to as Gwei. To make things more simple, think of ETH as dollars, and Gwei as cents.
Are gas fees necessary?
In short, yes. Gas fees pay for Ethereum mining that verifies the transaction and keeps the blockchain up to date. This is because Ethereum is currently using a proof of work protocol. In the future, the network will be switching to a proof of stake protocol, at which point there will be no more gas fees.
Currently, gas is necessary to keep Ethereum operational.
How is the fee determined?
Every transaction has a variable gas fee, but how is this fee calculated? The amount of gas is determined by the supply of mining capacity and the demand for transactions to be verified. Similar to actual gas, changes in price are determined by supply and demand. If the network is more congested than normal, the fee will be higher than average.
Keep in mind, miners can decline to process any transaction if the gas price is not high enough for them. The gas fee must outweigh the cost of the computational power needed to process the transaction.