DEFINITION of 'Gas Price (Ethereum)'

Gas price refers to an internal price that is paid for running a transaction or a contract on the Ethereum network.

BREAKING DOWN 'Gas Price (Ethereum)'

The concept of using a separate unit (gas price) instead of the default token of the network (ether), allows a decoupling of the two. It helps to separate out the price of computation from the price of the ether token in the open market. 

For instance, imagine that miners are demanding 1/10,000 ether for a unit of mining work. If they later wish to increase the mining fees by 25%, it would amount to 1/8,000 ether. This increase in mining price will start impacting the price of ether in fiat currencies like U.S. dollars, which may not be the ideal way for an economy to work.

Instead, if the mining work is quoted in a separate unit, like 1 gas price unit, and that is set to be worth 1/10,000 ether, then the increase (or decrease) can be handled in terms of changing the gas price unit. For the same 25% change, the miners will get the same benefit if the gas price unit is changed to be worth 1/8,000. That keeps ether market prices independent of the units required for network computational use. (For more, see What Is Ether? Is It the Same as Ethereum?)

  1. Gwei (Ethereum)

    Gwei is the one of the commonly used denominations of ether (ETH), ...
  2. Blockchain Wallet

    A blockchain wallet is a digital wallet that enables users to ...
  3. Ethereum Enterprise Alliance

    The Ethereum Enterprise Alliance brings together start-ups and ...
  4. Casper

    Casper is a proof-of-stake cryptocurrency protocol designed for ...
  5. United States Natural Gas Fund ...

    An exchange-traded security designed to track percentage changes ...
  6. Ethereum Classic

    Ethereum Classic is a decentralized, blockchain-based distributed ...
Related Articles
  1. Tech

    What Is Ether? Is It the Same as Ethereum?

    Ether is a means of buying services within Ethereum but it's not a cryptocurrency per se, like bitcoin.
  2. Tech

    How to Mine Ethereum on Your Computer

    You can get ether by buying it on the open market, accepting it as payment--or by mining it yourself. Here is how to do the latter.
  3. Tech

    What's Putting Pressure on Ethereum's Price?

    Ether, one of the most sought after cryptocurrencies, has been under pressure lately.
  4. Tech

    Ethereum Mining Uses a Small Country's Worth of Electricity

    Ethereum mining has grown considerably in recent months as the price per coin has jumped by more than 30x. The result? Miners use electricity. A lot of it.
  5. Tech

    Has Apple Banned Ethereum Apps from the App Store?

    Apple is notoriously strict about what Apps are allowed in the App Store. But why are they making it hard for Ethereum apps?
  6. Tech

    Ether Sets a New Daily Transactions Record

    There are ten times more ETH transactions taking place per day now than at the start of the year.
  7. Tech

    Ethereum Price Stable Despite Attacks, Potential Fork

    Despite repeated bursts of panic, and yet another hard fork due to security breaches, Ethereum is just fine.
  8. Tech

    Ethereum Smart Contracts Vulnerable to Hacks: $4 Million in Ether at Risk

    About 34,200 Ethereum smart contracts worth $4.4 million in ether are vulnerable to hacking, according to a new report.
  9. Tech

    Digital Currencies: The Best-Performing FX Bets of 2016?

    Digital currencies like bitcoin may turn out to have been better "forex" bets than any fiat currency.
  10. Tech

    Ethereum Slides Along With Other Cryptocurrencies

    Ether, the crypto-fuel of the Ethereum blockchain​, has seen a sharp correction recently and is trading below $200.
  1. What main factors affect share prices in the metals and mining sector?

    Discover the primary factors that influence share prices of companies in the metals and mining sector and how companies can ... Read Answer >>
  2. What is the metals and mining sector?

    Learn about the mining sector and the many ways that mining companies profit from the location and extraction of minerals ... Read Answer >>
  3. What percentage of the global economy is comprised of the oil & gas drilling sector?

    Read about a rising industry that already composes as much as one-twentieth of total global economic output: the oil & gas ... Read Answer >>
  4. Why should a growth investor consider the metals and mining sector?

    Examine facts and trends about the metals and mining sector and the world economy that make metals and mining stocks attractive ... Read Answer >>
  5. How does government regulation impact the oil & gas drilling sector?

    Find out how government regulation of the oil and gas sectors is often positive for the large companies, but may be negative ... Read Answer >>
  6. What are the main reasons an investor should consider an allocation to the oil and ...

    Learn three of the main reasons for investors to consider making some asset allocation to investments in the popular oil ... Read Answer >>
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center