What is Ethereum’s Gas?

FAQ: What is Ethereum’s Gas?

Gas is not a token or coin. Gas is a pricing mechanism used to determine how much Ethereum should be required to purchase computing power on the Ethereum Virtual Machine

When someone pays for a transaction or smart contract execution, the Gas price is determined based on current network volume. The user then pays for Gas with their Ethereum in order to execute the transaction or smart contract computation.

It may help to think of Gas as a compute credit, which can be purchased initially to fund a smart contract, but which changes in value over time depending on network availability.

 

Tips and Tricks

When funding a smart contract or choosing a gas limit for a transaction, it may help to think of it like fuelling a car for a long road trip. It’s hard to know exactly how much you’ll need for the trip, so it’s always good to budget for slightly more than you’ll need.

In just the same way; however, only the gas you use will be consumed, and the rest will be returned to you if it isn’t.

 

Did you know?

Ethereum implemented the use of gas in order to prevent smart contracts from running wild. Because there’s no central management of a blockchain, the gas price is adjusted to automatically prevent smart contracts from consuming an unfair amount of the network’s resources.

 

For more information, you may want to watch this video from our partners at Blockchain.WTF.

What is the difference between coins, tokens, and crypto-assets?

In the brave new world of cryptographic assets, it can be confusing to determine what is what.

Coins – Bitcoin, Ethereum, Monero etc.

  • Are highly divisible and can be traded
  • Have their own blockchain network
  • Can be earned as rewards for mining or maintaining the network

Tokens – Golem, 0x Protocol, Gemini Dollar

  • Are highly divisible and can be traded
  • Do not have their own blockchain network
  • Cannot be earned for mining or network maintenance
  • Can be earned for providing specific on-chain services

Assets Cryptokitties, Property Titles

  • Are not divisible but can be traded
  • Cannot be earned for mining or network maintenance
  • Can represent real-world items