Gas Fees in Cryptocurrency: What They Are and Why They Matter

Blockchain
MARKET_WATCH

Date: August 19, 2025
Source: NFTevening – "What Are Gas Fees In Crypto? ETH Gas Fees Explained" (by Zander Brown) NFT Evening+9NFT Evening+9NFT Evening+9

 

Introduction

When using blockchain networks, especially those supporting smart contracts like Ethereum, you'll encounter a fee known as gas. This cost is essential for executing transactions and running decentralized applications (dApps).

 

Key Insights

What Are Gas Fees?
Gas fees are payments made by users to have their transactions processed and validated on blockchain networks like Ethereum, Polygon, and Binance Smart Chain (BSC). They compensate validators or stakers for their computational work and help maintain network security. Investopedia+14NFT Evening+14Crypto.com+14arXiv+10Coinbase+10web3labs.com+10

What Is Gas?
Gas is a unit measuring the computational effort required for blockchain operations. The total fee depends on both the amount of gas used (gas limit) and the price per unit (gas price). Gemini+15NFT Evening+15Crypto.com+15

Denominations: Gwei Explained
Gas prices are quoted in gwei, which denotes one-billionth of an ETH (10⁻⁹ ETH). Crypto.com+5NFT Evening+5MoonPay+5Coinbase+2MoonPay+2

Why Gas Fees Exist

Incentivize Participation: Validators (or miners in PoW systems) earn gas fees as a reward for securing and validating the network. NFT Evening+15Coinbase+15web3labs.com+15

Prevent Network Abuse: Fees deter spam by attaching a cost to transactions, maintaining network integrity.web3labs.comCoinbase

How Gas Fees Are Calculated
Total gas fee = Gas Used × Gas Price (in gwei). A user also sets a gas limit (maximum gas willing to spend) and may include a tip to prioritize their transaction. Coinbase+1

Why Gas Fees Vary
Network demand and congestion affect gas prices: peak traffic = higher fees; off-peak = lower costs. Smart users often time transactions to save on fees. CoinbaseInvestopedia

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