What Is Gwei?
Gwei is a portmanteau (a blend 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 middle man or interference from a third party.
Similar to fiat currencies like the U.S. dollar or euro, ether is broken into denominations. Wei is the smallest denomination of ether, like cents are to the U.S. dollar. However, while there are 100 cents in a dollar, there is one quintillion wei (18 zeros) to one ether; there are one billion gwei to one ether.
- 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 one ETH.
- Gwei is the most commonly used ether unit 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.
Gwei is also called nanoether—nano is the prefix used to denote one-billionth of something. Some cryptocurrencies have such high fiat currency exchange rates that tiny denominations have become necessary. These micro-denominations allow for a cryptocurrency's market value to grow as high as supply and demand will take it while allowing for smaller transactions.
Gwei is the most commonly used ether unit because it is how "gas" prices are denoted. Gas is the term used in the Ethereum network for transaction power. For a transaction to occur, you need to give it some gas, which costs gwei. Gas fees are payments made by users to compensate the miners and validators for the computing energy required 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. The ETH coin is commonly called Ethereum, although the distinction remains that Ethereum is a blockchain-powered platform, and ether is its cryptocurrency. Gwei is used to price the "gas" used to transact on the Ethereum network.
Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on the Ethereum blockchain. Priced in small fractions of the cryptocurrency ether, referred to as gwei and sometimes also called nanoeth, the gas is used to allocate resources of the Ethereum virtual machine (EVM) so that decentralized applications such as smart contracts can self-execute in a secured but decentralized fashion.
The exact price of the gas is determined by supply and demand between the network's miners, who can decline to process a transaction if the gas price does not meet their threshold, and users of the network who seek processing power.
Ether Denominations Explained
The list below displays the typical ether units. Notice in the table that the denominations each have an alternate name (in parentheses)—based on influential figures in the world of cryptography. For example, gwei may 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 pictures Abraham Lincoln. Mostly, it's the fans and insiders of Ethereum who use these nicknames; but it's interesting to note that Ethereum uses cryptic language and naming conventions, just like Bitcoin does.
Here, in order of appearance in the table, is the significance of the ether units' nicknames:
- Wei (wei): For Wei Dai, who formulated the concepts of all modern cryptocurrencies—best known as the creator of the predecessor to Bitcoin, B-money.
- Kwei (babbage): For Charles Babbage, a mathematician, philosopher, inventor, and mechanical engineer—designed the first automatic computing engines.
- Mwei (lovelace): For Ada Lovelace, mathematician, writer, and computer programmer—she wrote and published the first algorithm.
- Gwei (shannon): For Claude Shannon, an American mathematician, cryptographer, and crypto-analysis guru—also known as "the father of information theory."
- Twei (szabo): For Nick Szabo, a computer scientist, legal scholar, and cryptographer—known for his pioneering research in digital contracts and digital currency.
- Pwei (finney): For Hal Finney, a computer scientist and cryptographer—he was one of the early developers of Bitcoin, and alleged to be the first human to receive a bitcoin from Satoshi Nakamoto, the named founder of Bitcoin.
- Ether (buterin): For Vitalik Buterin, a programmer and writer—he created Ethereum.
It's important to note that Ethereum is constantly evolving, so there are many denominations in use currently that are not in the yellow papers maintained by the Ethereum developers and community.
What Is Gwei to ETH?
Gwei is a denomination of the cryptocurrency ether, powered by the Ethereum ecosystem. There are one billion gwei per ether (ETH).
What Is Gwei Gas Price?
Gwei gas price is the fee paid to the network and transaction validators for the computational work of verifying a transaction. The standard transaction fee is 21,000 gwei.
How Are Gwei Gas Fees Calculated?
The standard transaction fee in the Ethereum network is 21,000 gwei. More complex transactions can cost more. You can calculate a transaction fee using the formula Gas Units (Limit) x (Base Fee + Tip).
Will Ethereum 2.0 Reduce Gas Fees?
Ethereum 2.0 refers to transitioning the Ethereum consensus network from proof-of-work (PoW) to proof-of-stake (PoS). As part of this update, gas fees are expected to fall, since PoS staking is far less energy-intensive than PoW mining. This update is slated to take place in the Fall of 2022.
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