What Is Gwei?
What is Gwei?
Gwei is a portmanteau (a mixture of words) of giga and wei. Gwei is a denomination of the cryptocurrency ether (ETH), the digital coin used on the Ethereum network. Ethereum is a blockchain platform, like Bitcoin, where users transact to buy and sell goods and services without a middleman or third-party interference.
Similar to fiat currencies like the US Dollar or Euro, Ether is divided into denominations. Wei is the smallest denomination of ether, as cents are for the US dollar. However, while there are 100 cents in a dollar, there is a quintillion wei (18 zeros) for an ether; there are one billion gwei for one ether.
Key points to remember
- Gwei is a denomination of the cryptocurrency ether (ETH), used on the Ethereum network to buy and sell goods and services.
- A gwei is one billionth of an ETH.
- Gwei is the most commonly used unit of Ether because it is easier to specify Ethereum gas prices.
- Many cryptocurrencies have adopted naming conventions for their micro-denominations because these smaller units can be used more often in transactions.
Understand the web
Gwei is also called nanoether—nano is the prefix used to denote one billionth of something. Some cryptocurrencies have such high exchange rates that tiny denominations have become necessary. These micro-denominations allow the market value of a cryptocurrency to grow as high as supply and demand will while allowing for smaller transactions.
Gwei is the most commonly used unit of ether because that is how “gas” prices are quoted. Gas is the term used in the Ethereum network for transaction power. For a transaction to take place, you need to give it gasoline, which costs gwei. Gas fees are payments made by users to compensate miners and validators for the computational energy needed to process and validate transactions on the Ethereum blockchain.
There are one billion gwei in one unit of ether (ETH).
Gwei as Ethereum’s “gas”
The Ethereum platform has a native cryptocurrency, known as ether or ETH. Ethereum itself is a blockchain technology platform that supports a wide range of decentralized applications (dApps), including cryptocurrencies. ETH coin is commonly referred to as Ethereum, although the distinction remains that Ethereum is a blockchain-powered platform and Ether is its cryptocurrency. Gwei is used to set the price of “gas” used to transact on the Ethereum network.
Gas refers to the fee, or fee value, required to complete a transaction or execute a contract on the Ethereum blockchain. Priced in small fractions of the cryptocurrency ether, called gwei and sometimes also called nanoeth, the gas is used to allocate Ethereum virtual machine (EVM) resources so that decentralized applications such as smart contracts can auto-run in a secure but decentralized mode.
The exact price of gas is determined by supply and demand between network miners, who can refuse to process a transaction if the gas price does not reach their threshold, and network users who seek processing power .
Ether Denominations Explained
The list below displays typical ether units. Note in the table that the denominations each have an alternate name (in parentheses) – based on influential figures in the crypto world. For example, gwei can also be called shannon, after Claude Shannon, an American mathematician, cryptographer, and crypto-analysis guru.
Ether’s naming convention is a nod to its founding figures, much like a $100 bill features an image of Ben Franklin and a $5 bill features Abraham Lincoln. It is mainly Ethereum fans and insiders who use these nicknames; but interestingly, Ethereum uses cryptographic language and naming conventions just like Bitcoin.
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Here, in order of appearance in the table, the meaning of the nicknames of the ether units:
- Wei (wei): For Wei Dai, who formulated the concepts of all modern cryptocurrencies, best known as the creator of Bitcoin’s predecessor, B-money.
- Kwei (babgae): For Charles Babbage, mathematician, philosopher, inventor and mechanical engineer, designed the first automatic calculation engines.
- Mwei (lake of love): For Ada Lovelace, mathematician, writer and computer programmer, she wrote and published the first algorithm.
- Web (Shannon): For Claude Shannon, American mathematician, cryptographer and crypto-analysis guru, also known as “the father of information theory”.
- Twei (Shabo): For Nick Szabo, computer scientist, jurist and cryptographer, known for his pioneering research on digital contracts and digital currency.
- Pwei (finney): For Hal Finney, computer scientist and cryptographer, he was one of the first developers of Bitcoin and was said to have been the first human to receive a bitcoin from Satoshi Nakamoto, the named founder of Bitcoin.
- Ether (buterine): For Vitalik Buterin, programmer and writer, he created Ethereum.
It is important to note that Ethereum is constantly evolving, so there are many denominations in use currently that are not listed in the yellow books maintained by the Ethereum developers and community.
What is Gwei for ETH?
Gwei is a denomination of the cryptocurrency ether, powered by the Ethereum ecosystem. There are one billion gwei per ether (ETH).
What is the price of Gwei gas?
The Gwei gas price is the fee paid to the network and transaction validators for the computer work of verifying a transaction. The standard transaction fee is 21,000 gwei.
How are Gwei gas charges calculated?
The standard transaction fee on the Ethereum network is 21,000 gwei. More complex transactions may cost more. You can calculate transaction fees using the formula Gas Units (Limit) x (Base Fee + Tip).
Will Ethereum 2.0 reduce gas fees?
Ethereum 2.0 refers to the transition of the Ethereum consensus network from proof-of-work (PoW) to proof-of-stake (PoS). As part of this update, gas fees are expected to drop, as PoS staking is much less energy intensive than PoW mining. This update is expected to take place in the fall of 2022.
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