Ask an Expert: What is Ethereum gas and how is it different from Ether?

In Ask an Expert/Blog/Ethereum

Ethereum gas is a core component of Ethereum’s blockchain network. In this episode of Ask an Expert, our blockchain expert Taylor explains what Ethereum gas is, and how it differs from Ethereum’s cryptocurrency: Ether. Check out our video, and see below for the script for this video episode! Stay tuned and subscribe as we update and add more Ask an Expert episodes to Youtube!

What is Ethereum gas?

Ethereum gas is an internal unit of account for transactions on the Ethereum network. The total units required to run a transaction is multiplied by a gas price to yield the total transaction fee. This is like filling up a petrol car with gas to go on a trip. Ethereum gas price is expressed as “Ether per unit of gas”, similar to how fuel stations list the price in “dollars per gallon” (or Euros per liter).

How does it differ from Bitcoin fees?

Bitcoin transactions are counted in number of bytes–that is the amount of data that is being added to the blockchain. Because there is a limited amount of operations that can be done with the Bitcoin scripting language, this method of byte-counting works fairly well.

So what about Ethereum transactions?

Because the EVM (Ethereum Virtual Machine) allows for a wide variety of operations, a way of balancing the cost of those transactions was devised. For example, adding two numbers might cost 3 gas. Multiplying numbers might cost 5 gas. And storing data might cost 100 gas per byte. This type of system gives greater flexibility to balance the limited resources of blockchains.

Why aren’t transactions paid with Ether directly?

With increasing attention being given to Bitcoin and associated price rises, the cost of sending a transaction also increased. To alleviate this, a secondary price mechanism was introduced that allows the cost of the native token to be separate from the cost of sending a transaction.

Okay, did it work?

Ethereum gas priceNot really. So far, there is a mechanism in place to allow users and miners accept differing prices, but most users stick with the default amount and changes in price only happen when a community call-to-action occurs. Several things are being considered to alleviate this, but there is no clear solution available. One way of taking charge is by checking ETH Gas Station for the average price and time it will take to confirm a transaction. Due to the recent rise in all cryptocurrency prices, some are trying to force a 10x reduction in Ethereum gas cost. The image included here was taken on May 8, 2017.

To read more about the Ethereum project and it’s cryptocurrency, Ether, check out our informational page, where you can find great resources on both! If you would like to watch a video about gas to fine-tune your understanding, we have one for you!

Originally published May 9, 2017