Gas and Transactions fees?

Gas and Transactions fees?

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To make it simple, gas is a unit exclusively used by Ethereum to navigate the blockchain system, that can be compared to what fuel is to a car. If the car has fuel it moves if it doesn’t it won’t work. Same thing in the blockchain mining process. It covers the work between the operations towards a transaction (calculations, memory access, storage, etc.).

Let’s take a look at the process behind the scenes and understand what happens when you sign and send your transaction AKA TX.


First thing you need to know is about the miners, because they are the ones who run the process from the moment you send in your transaction, they compute and validate them. Your transaction runs to a pool with other transactions where the miners get to pick from highest to lowest, validating and executing your TX whether they fail or not. This processing power is to guarantee the legitimacy of each transaction, but does not guarantee the success of your TX.

Miners then pick up the transactions and put them into a block, now making them available in the blockchain, visible and immutable to all users. Meaning, once they are added to the blockchain they are now shared and permanent.

Whenever you interact with Ethereum network blockchain, whether you are sending tokens, ETH, or even checking out contracts, whatever it is you do within the blockchain you have to pay for that interaction, the computation, and that is what the gas is for, to fuel the process of your transaction. And even though that payment is calculated in ‘GAS’ it is paid in ETH. (*check out the website at the end of the article for a website that will help you convert.)

All TX fees are paid to miners, for the computation, and these fees are not directed to Ethereum network. A TX fee is paid to the miners to process, validate and add transactions into the blockchain. The way the gas is used is by the amount of “work” your transaction requires. For example, again, it’s the same as with a car, as you change speed and gear the car consumes more or less fuel, correct? So it is with your transactions and the use of gas.


They contain the addresses needed to make your transactions. Addresses used to send and receive storing public and private keys, but does not hold cryptocurrencies per se, because that’s what the blockchain is for.

Check out MyEtherWallet.

Gas Limit & Price

Gas limit is the maximum amount you are allowed and willing to spend on each transaction, and gas price is the value for each gas unit you are willing to pay. Again let’s think of fuel to a car, 1 gallon of gas may cost 3.00$ USD, now how much would fill up your tank? 20 gallons? Alright, you see, the particular amount that would fill up your tank can be compared to GAS LIMIT and the GAS PRICE is the price for each unit. Makes sense?

A gas limit has been set up to protect both the miner and the users, to ensure that nothing runs forever.

Setting your gas price high enough can pretty much ensure you whether the miners pick you up first within the mining pool and add you to a block faster. And the price you will set for your transaction should be according to how quickly you need your TX to be picked up, validated and added into a block, in other words — mined. Which does not mean you must go with extreme prices, because you must know you might get nothing in return during Token Creation Periods.

Just to give you an idea, during TOKEN CREATION PERIOD it will cost you more to be mined, for obvious reasons, the pool is full and the miners are going to go straight to the highest prices offered. On normal TOKEN CREATION PERIODS a 40 GWEI will usually get the miners attention to include you into the next block (but will not guarantee it), 20 GWEI will get you into the next few blocks, and 2 GWEI will get you into a block within a few hours.

You have the option to change these amounts within your wallet, and all unused gas units are refunded to you, unless your gas price runs “over budget”, even though your transaction fails it still makes into the blockchain, so there will be no refund, because of the work it has been done.

Always check with the token sale holders for the gas limit so that you won’t run into an “OUT OF GAS” error, or “OVER BUDGET”. Now, if they allow you to choose then you, the person creating the transaction, controls the amounts. Usually a 200000 is the average gas limit amount needed but some may require more.

Examples of conversion (via before token creation period:

  • 40 GWEI * 200000 == 0.008 ETH == $5.60 USD
  • 70 GWEI * 200000 == 0.014 ETH == $9.80 USD
  • 100 GWEI * 200000 == 0.02 ETH == $14.00 USD

Take the gas limit and multiply by the gas price, which together becomes the price in ETH. And from ETH into USD.

Here are some websites that will help you:

Know what miners are accepting.



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