Crypto has become an extremely popular opportunity for those who want to make some profit or even earn passive income. In fact, TripleA estimates that there are over 320 million crypto users worldwide, considering that the first cryptocurrency was launched less than 15 years ago. It is a surprising number, indeed.
But one thing that crypto users would prefer to avoid is the fees. And with a volatile market, it is highly possible that sometimes, transaction fees may reach amounts no one would like to pay.
Thus, let’s talk about gas fees and whether it is possible to maintain a blockchain’s activity without them.
What Are Gas Fees?
Also called transaction fees (depending on the blockchain), gas fees are the cost a specific blockchain requires users to pay to network validators each time they perform a certain action on the blockchain.
Such fees are usually required so that network validators can receive a reward for verifying transactions and adding them to the block.
While some transaction fees do not change so often (e.g., on various crypto exchanges), when it comes to actions performed directly on a blockchain, transaction fees can be quite unpredictable. And this can upset crypto enthusiasts, if not even make them think twice before further investing in cryptocurrencies.
How Are They Calculated?
Gas fees are usually calculated based on one of the most known concepts in the crypto industry: supply and demand.
When it comes to blockchain technology, supply is the total computing power provided by validators, while demand is the computational power required to execute the transactions submitted by network users.
Usually, transaction fees are calculated in real-time, as the supply and demand can dramatically fluctuate from one moment to another, depending on the number of transactions in the processing stage or the computational power provided by the validators.
In order to understand even better how gas fees are calculated, let’s take Ethereum’s example. The gas fee is calculated by multiplying the gas limit and the gas price per unit. Thus, if the gas limit is 10,000 and the price per unit stands at 100 gwei, the Ethereum gas fee would be 10,000*100=1,000,000 gwei (0.001 ETH)
SIDENOTE – Gwei (Giga Wei) is a small fraction of Ether (ETH), Ethereum’s native cryptocurrency. 1 gwei is the equivalent of 0.000000001 ETH. Gwei is used to pay transaction fees on the Ethereum blockchain.
Where Can You Find Gas Fees?
Usually, those aiming to perform a related action directly on a blockchain will be required to pay a transaction fee to validate the process. For instance, any transaction involving an ERC-20 token (Ethereum-based token) will require an additional amount of ETH to pay the gas needed to validate that specific transaction.
While the Ethereum blockchain works with gas fees, Bitcoin, for example, calls these payment transaction fees. Whenever Bitcoin is involved in a transaction (e.g., buying or selling Bitcoin), there will be transaction fees. Bitcoin transaction fees usually depend on the data volume of that particular transaction and the speed at which the user wants miners to complete the transaction.
What are Gasless Blockchains?
While traditional blockchains use gas to complete transactions, gasless blockchains prove that the gas price can go as low as 0. Thus, when operating and using a gasless network, users do not need to pay gas in order to have their transactions approved.
Usually, gasless blockchains aim to provide a more positive experience for network users while also solving some of the biggest issues blockchains face.
For instance, some projects plan to solve the Scalability Trilemma, which implies that a specific blockchain cannot achieve at the same time all the following goals: scalability, security, and decentralization. Thus, projects like Redlight Finance aim to improve some features in order to provide all the three aspects mentioned before at the same time and with high quality.
Final Thoughts
Blockchain technology is widely used in the world these days. At the moment of writing, the number of crypto users exceeds 320 million.
While the crypto market is constantly increasing, crypto enthusiasts still do not like the idea that they have to pay transaction fees in order to have their blockchain actions validated.
However, while some blockchains still require transaction (or gas) fees, gasless blockchains come with another idea implying that even if they use gas, its price will always be 0. Furthermore, such networks aim to solve other big problems in the blockchain world, such as the Scalability Trilemma.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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