Back-to-basics week CAPPIES! Today we shall backtrack to ground zero — the fundamentals of crypto trading. What is Gas and what is Gas limit?!
Gas —Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network.
Gas Price — Well its refers to the price you are paying for Gas! (refer to above) Their unit of measurement is denoted in ‘gwei’. The unit of “Gas Price” is called Gwei and 1 Gwei is equivalent to 0.000000001 Ether.
Gas Limit — Gas limit refers to the maximum amount of gas you are willing to consume on a transaction.
So what does all these mean?
To perform any transaction on the network, we will need to pay the miners for work done. Work is done for every computation executed on the network, which requires a fee. If you set higher gas fees would mean your transaction would be prioritized. Higher gas limit means more computational work can be done while interacting with smart contracts. In other words, a more complicated transaction would require a higher gas limit in order for it to be fully executed. Let’s use an analogy for easier understanding
Lets use a car as an analogy and we would like to travel from LA to California. In other to reach there in a fast and efficient manner;
1) Your car better have a high fuel tank capacity (aka Gas Limit) so we are able to reach our destination! If we are stuck halfway, aint no refunds given for fuel consumed…
2) We better be paying top petrol (aka higher gas fees) so the car can run faster and more smoothly
Note: You don’t have to be too worried about setting the gas limit value as most platforms would automatically set the default gas limits for the types of transactions you’ll engage in.
Now you have a good grasp of fees in crypto trading, always remember to DYOR (Do Your Own Research) CAPPIPES!
