Gwei

What is Gwei?

Gwei is a way to measure the expense, or ‘gas fees,’ associated with transactions and computer-based tasks within ethereum (ETH).

It is the same way we use smaller denominations like pence for pounds and cents for dollars in traditional currency.

Essentially, gwei, short for gigawei, helps calculate the fees you need to pay when you perform transactions or run smart contracts on the ethereum blockchain.

Transaction fees are the incentives provided to miners for confirming transactions. To determine the total gas fee, you multiply the amount of gas needed for a transaction or contract operation by the current gas price, which is measured in Gwei.

The gas fees, measured in gwei, depend on how many people are using ethereum. Users can choose the gas price they’re comfortable paying for their transactions. Miners who process these transactions tend to pick the ones with higher gas fees first.

This system motivates miners to include those transactions in the blocks they create. Additionally, the gas limit is the most gas a user is willing to use for a transaction. A standard transaction fee stands at 21,000 gwei.

On the ethereum blockchain, nearly all transactions eventually go through. However, those who offer higher gas fees see their transactions processed more quickly. Your gas fee depends on how complex your transaction is and how busy the network is. Gas fees tend to rise when there’s a lot of activity on Ethereum.

Gwei is occasionally called “shannon,” named after Claude E. Shannon, a renowned mathematician and computer scientist who contributed significantly to information theory.

How Much is 1 Gwei? 

The token of ethereum is called Ether, represented as ETH. One Gwei is a tiny fraction (one nano) of ETH, specifically 0.000000001 ETH. So, if a transaction costs 0.000000020 ETH, you can express it as 20 Gwei. Ethereum has other units, the smallest unit being Wei. 1 Gwei is equal to 1 billion units of Wei. 1 Gwei equals 0.000000001 or 10-9 ETH. Conversely, 1 ETH equals one billion (109) Gwei.

• Wei (wei): Named after Wei Dai, who played a pivotal role in shaping modern cryptocurrencies. He’s best known for developing the precursor to bitcoin, called B-money.
• Kwei (babbage): Named in honor of Charles Babbage, a renowned mathematician, philosopher, inventor, and the mind behind the first automatic computing engines.
• Mwei (lovelace): Paying tribute to Ada Lovelace, a remarkable mathematician, writer, and computer programmer who authored and published the world’s first algorithm.
• Gwei (shannon): Named after Claude Shannon, an accomplished American mathematician, cryptographer, and the revered “father of information theory.”
• Twei (szabo): In recognition of Nick Szabo, a computer scientist, legal scholar, and cryptographer acclaimed for his pioneering work in digital contracts and digital currency.
• Pwei (finney): In memory of Hal Finney, a computer scientist and cryptographer who contributed significantly to the early development of bitcoin and is believed to be the first person to receive bitcoin from Satoshi Nakamoto, the presumed founder of bitcoin.
• Ether (buterin): Named after Vitalik Buterin, a programmer and writer who conceived and created ethereum, a prominent cryptocurrency and blockchain platform.

Is Gwei Required?

When you engage in transactions on the Ethereum network, you’ll encounter “gas fees,” measured in Gwei. If you happen to hold Ether, you already possess Gwei. If you own a whole Ether coin, you could think of yourself as having a billion Gwei because 1 ETH equals 1,000,000,000 Gwei.

Whether you’re using ethereum, an ERC-20 token, or any other transaction on the ethereum network, you’ll require Gwei to cover these fees.

Are There Alternatives?

While you can’t avoid using Gwei for ethereum transactions, other cryptocurrencies and networks have significantly lower transaction costs. For instance, cryptocurrencies like Stellar, Dogecoin, Monero, Cardano, and Litecoin typically have lower fees compared to ethereum for most transactions.

Gwei vs. Sats

Gwei and Sats are measurement units in cryptocurrency. Gwei is used for ethereum, and Sats are used for bitcoin. Gwei represents a smaller value than Sats. To be precise, 1 Gwei equals 0.000000001 ethereum (ETH), while 1 Sat equals 0.00000001 bitcoin (BTC).

How Are Gigawei Gas Fees Calculated?

The usual transaction fee on the ethereum network is 21,000 gwei, but it can be higher for more complicated transactions. To determine your transaction fee, you can use this formula: Gas Units (Limit) multiplied by (Base Fee + Tip).