Gwei, short for “gigawei,” is a unit of measurement for the amount of computing power or gas required to perform transactions and execute smart contracts on the Ethereum blockchain. It is one of the key terms used in Ethereum’s gas system, which is essential for the functioning of the network.
Here’s a breakdown of the term:
Gas: In the context of Ethereum, “gas” refers to the computational work required to execute a specific operation or transaction on the network. Every operation in an Ethereum smart contract, including sending Ether from one address to another, deploying a smart contract, or executing a function within a smart contract, consumes a certain amount of gas.
Gwei: Gwei is a denomination of Ether, the native cryptocurrency of the Ethereum network. It is named after Wei Dai, a computer scientist known for his contributions to cryptography and the concept of “b-money.” Gwei is equal to one billion Wei. Wei is the smallest unit of Ether.
Gas Price: Gas price is the amount of Ether (measured in Gwei) that a user is willing to pay for each unit of gas used in a transaction. It represents the transaction fee a user is willing to offer to miners to prioritize their transaction. Transactions with higher gas prices are typically processed more quickly because miners have an incentive to include them in the next block.
For example, if you set a gas price of 20 Gwei and your transaction consumes 100,000 units of gas, you would pay 0.002 Ether (20 Gwei * 100,000 gas units) as a transaction fee.
Gas prices can vary based on network demand. During periods of high network congestion, users may need to offer higher gas prices to ensure their transactions are processed promptly.
In summary, Gwei is a unit of Ether used to measure transaction fees and the cost of computational operations on the Ethereum blockchain. It’s an essential concept for users and developers interacting with the Ethereum network, helping them determine how much Ether to allocate for transaction fees.