What are Gas Fees?
In simple terms, for each Ethereum based transaction or when using a function of an Ethereum based application, there are resources required to fulfil the transaction.
These resources are known as “Gas”. A very fitting metaphor is that of a car; which requires gas in order to function. In both cases, larger and faster actions require more gas.
Ethereum Gas fees are based on a market price and based on the amount of Ethereum paid for fees every day, and represents the value of what the Ethereum network produces.
The market price of Ethereum is referred to as “Gwei”. A Gwei is a very small percentage of Ethereum (technically a Gwei is 0.000000001 ETH). So rather than saying the Ethereum gas cost is 0.000000001 Ether, it is generally accepted to just state 1 Gwei. Overall, the gas aspect provides Ethereum with an additional layer of substance.
Example of Etherium Gas Fees
Why is the cost of Gwei suddenly in the spotlight?
The costs of Gwei has always been an on-going topic, but the short answer is due to its rising popularity from the network being more heavily used. The rise in use of Ethereum has reflected the increasing value of the token; in just the last 6 (six) months, the total valuation of a single Ethereum has grown a whopping 307%.
Overall, the market does not consider the fees because of the value the network brings to them, especially when considering that fees are the same whether you send $50 or $5,000,000.
ETH 2.0: Scalability & Lower Gas Fees
Ethereum 2.0 are new developments that will essentially provide Ethereum scalability and allow it to function even better and faster—effectively facilitating growth by enabling thousands of interactions per second while also providing lower gas fees.
Other notable aspects of Ethereum 2.0 include smart contracts being developed to require less gas and redefining mining parameters, which will drive down the cost of gas fees.
From a practical perspective, there will be no transitional phase for Ethereum holders; effectively there is no action required on behalf of the holder, and their Ethereum will function as usual on the Ethereum 2.0 network once it is rolled out. Ethereum 2.0 is currently being launched and is expected to be fully rolled out by approximately 2023.
