What is Gwei?
Gwei refers to a very small amount of Ethereum that is used to calculate transaction fees on the Ethereum network. One Gwei is equal to 0.000000001 ETH. If you pay 0.000000020 ETH as a transaction fee, you would say that the cost was 20 Gwei. Gwei is short for gigaWei. Wei is the smallest unit of the Ethereum coin. One Gwei equals 1 billion Wei.
What is Gwei in Crypto?
Gwei is a term that refers to a small amount of the native token of the Ethereum Network – ether (ETH). To make it easier to deal with fractions of an ETH token, there are several denominations of Ether, with Gwei being the most commonly used.
Gwei is strictly used in reference to Ethereum; it does not apply to fractions of other crypto tokens.
One Gwei is equal to 0.000000001 ETH. If you pay 0.000000020 ETH as a transaction fee, you would say that the cost was 20 Gwei. Gwei is short for gigaWei. Wei is the smallest unit of the Ethereum coin.
Gwei is normally used in relation to network fees charged called gas. These fees are calculated, in Gwei, based on the type of transaction and the network congestion at the time. As these fees are normally a small fraction of an ETH token, it makes it much easier to use Gwei when discussing gas fees.
How Gwei Works
Gwei is mostly used to pay Ethereum gas, a fee charged for transacting on the Ethereum network. Gas fees are calculated based on the amount of computational power required and the amount of network traffic at the time of the transaction.
These fees are used to reward miners who validate transactions and blocks on the Ethereum blockchain. These miners spend time and electricity and receive Gwei in exchange.
A simple transfer of tokens will incur a lower gas fee than say a smart contract or using a dApp. A dApp is a decentralized application run on top of the Ethereum blockchain.
You can also pay a higher gas fee in Gwei to have your transaction carried out quickly. This can be useful in times of heavy network congestion. MIners can choose which transactions to validate first so transactions that pay a high gas fee will be prioritized.
Depending on the transaction you initiate and how quickly you want the transaction carried out, you may pay more Gwei or less Gwei. Users can set a maximum fee they are willing to pay to ensure their transaction gets carried out. The difference between the actual gas fee and the maximum limit will be refunded after the transaction is carried out.
If you set too low a limit of Gwei for your gas fee, your transaction may not be carried out if the network experiences high traffic.
How Much is 1 Gwei?
1 Gwei is equal to 0.000000001 ETH or 1 billionth of an ether. Gwei is short for gigawei. A wei is the smallest possible unit of Ether. 1 Gwei equals 1 billion Wei. 1 ether (ETH) is equal to 1 billion Gwei.
As Gwei is based on Ethereum, the value of one Gwei in dollars varies based on the current price of the Ether token. As the dollar value of Ethereum fluctuates, so too will the dollar value of Gwei. For instance, the dollar value of 50 Gwei today may not be the same as 50 Gwei tomorrow.
The accurate value of Gwei at any time is based on the current Ethereum price. The amount of Gwei you’ll need for a transaction will depend on the gas fee of that transaction.
When conducting transactions within the Ethereum ecosystem, it’s important to factor in the amount of Gwei you’ll need to carry out the transaction. Heavy network congestion can result in very high transaction fees unfortunately. Fees have been as high as $60 at times of extreme congestion. If you do not budget for the gas fee, you run the risk of your transaction not being carried out.
Gwei and its Sibling Units of Ether
Apart from the Gwei, there are other units of ether that exist in the Ethereum network. Here are all the other units of either.
- Wei (wei)—which is named after Wei Dai, who formulated the concepts of all modern cryptocurrencies, and is best known as the creator of the prototype to Bitcoin, B-money.
- Kwei (babbage)—named after Charles Babbage: mathematician, philosopher, inventor, and mechanical engineer who designed the first automatic computing engines.
- Mwei (lovelace)—named after Ada Lovelace: mathematician, writer, and computer programmer; she published the first algorithm.
- Gwei (shannon)—for Claude Shannon: an American mathematician, cryptographer, and crypto-analysis guru, who is recognized as “the father of information theory.”
- Twei (szabo)—for Nick Szabo: computer scientist, legal scholar, and cryptographer known for his early research in digital contracts and digital currency.
- Pwei (finney)—for Hal Finney: a computer scientist, and cryptographer; he was one of the early developers of Bitcoin, and alleged to be the first human to receive bitcoin from Satoshi Nakamoto.
- Ether (buterin)—for Vitalik Buterin, the creator of Ethereum.