We all need energy. While humans need it to stay energized and be able to do their work, vehicles need the energy to keep running. Similarly, blockchain networks need their energy to process transactions securely and on time.
And they get this energy from the transaction fees paid by users. In the case of Ethereum, this transaction fee is called Ethereum Gas Fees.
If you are wondering what is ethereum gas price, why it is needed or why the gas fee is so high, we are here to answer all questions, one at a time.
As a bonus, we will also tell you some tips to reduce the fee you pay for ETH transactions. Let’s dig into it.
What is Ethereum (ETH) Gas Price?
The transaction fee a user has to pay for making a transaction on the Ethereum blockchain is called Ethereum Gas Fee. In other words, every time a user performs a translation on the Ethereum blockchain, he/she has to pay a fee to the network.
This gas fee goes to compensating the miner for his/her time to verify the transaction by solving complex mathematical equations using their computer systems.
Another thing you need to know about the Ethereum gas fee is that it’s not fixed. The gas fee a user has to pay will depend on the transaction type, complexity and urgency. The more complex or urgent a transaction, the higher is the gas fee.
Also, a miner will usually select to verify transactions that have higher gas fees, especially when the rush or demand is high.
So, you can say that the Ethereum gas price also depends on the supply and demand. Some miners may even deny a transaction if the gas fee associated with it is too low.
This also allows users to process their transactions faster by paying a higher gas fee.
Also Read: Should I Invest in Ethereum (ETH) in 2021?
Why the Gas Fee is Important for the Ethereum Network
Ethereum gas strictly refers to the transactional/computational cost of the network (Ethereum Virtual Machine). Its main purpose is to separate the other costs, including the actual value of ETH, from the computational costs of running the EVM.
In addition, the gas fee was created as a way to pay miners who use their time and computational power to verify the transactions in order to keep the network running.
Miners are the lifeline or a PoW (proof of work) system like Ethereum, which depends on the hash rate of miners to ensure the security and efficiency of the network.
Now, you must have noticed that, unlike Ethereum, Bitcoin doesn’t have a gas fee. It’s because Bitcoin doesn’t employ smart contracts, which are conditional agreements between the transacting users of a blockchain.
In simple terms, Bitcoin is a pure digital payment currency that doesn’t work on conditions, which effectively limits the real-world uses of Bitcoin.
Thanks to smart contracts, ETH can be virtually used for performing any kind of trust-based transactions such as the exchange of money, property or anything else in a transparent and secure manner. Smart Contracts need gas to work properly and efficiently.
Now, the problem is that the Ethereum gas fee is constantly increasing as the demand for Ethereum transactions is boosting with no equal increase in the supply.
Basically, there are limited miners for the increasing number of transactions, which is why the transaction fee or gas price is increasing.
Moreover, users paying a higher gas can get their transactions processed faster, leaving users with a low gas fee waiting for their number.
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So, What’s the Solution? How Do You Make an Ethereum Transaction at a Low Gas Fee?
Yes, you can. You only need to know the best time to perform an Ethereum transaction for a low gas. As I said earlier, the Ethereum gas price is not fixed.
It changes depending on the demand and supply. At any given time, when there is a low demand (number of transactions) than the supply (number of miners), the transaction fee will be relatively lower compared to the peak times.
The real challenge is to find the best time when the Ethereum Gas price is the lowest.
If you read the Ethereum Gas charts (https://ethereumprice.org/gas/) carefully, you’ll find that the highest number of transactions happen between 8 AM and 1 PM (EST), while the least people transact between 12 AM and 4 AM (EST).
And when more people are transacting, the gas prices are expected to be in the high range. So, the best time to transact on the Ethereum blockchain is between 12 AM to 4 AM.
Also, the chart shows that the higher number of ETH transactions happen on Tuesdays and Thursdays, while the least number of transactions are done on weekends, i.e. Saturday and Sunday.
ETH is one of the top cryptocurrencies in the market, and it’s certainly ahead of the competition if we talk about the real value and use cases.
Even if the Ethereum network gas prices are increasing, you can always find ways to perform transactions at a lower fee and save some gas.
Do your research and follow the charts to recognize trends in order to figure out the best time to buy Ethereum easily & for a low fee.