Home Cryptocurrency Why is Gas the most important thing you should understand about cryptocurrency?

Why is Gas the most important thing you should understand about cryptocurrency?

by Admin

Nowadays, more and more people prefer to abandon exchanges and prefer to use decentralized wallets. However, the transition doesn’t go smoothly. The first thing you will encounter when you step outside the exchange platform is gas. Gas here is not just an abstract concept that you can ignore. It becomes your constant companion, requiring continuous attention. And it is important to note that not all Gas is the same.

What is Gas in cryptocurrency?

In simple words: it is a transaction fee on blockchain platforms for smart contracts. Gas is the fuel for the network, like gasoline for an engine.

  • When you send ETH on the Ethereum network, you pay some ETH to send.
  • When you send BNB on the BSC network, you pay some BNB for sending.
  • When you send SOL on the Solana network, you pay a bit of SOL per shipment.

At first glance, it may seem quite simple, but the real complexity and fun begins the moment you decide to send tokens that operate on a particular blockchain.

In the Ethereum blockchain world, there are a variety of tokens ranging from USDT and USDC to UNI, DAI, LINK and more. However, when sending any of them from your wallet (not from an exchange), you are faced with an integral part of the process – the need to pay a fee in ETH.

The simple logic is this: if a token is based on the Ethereum blockchain, you definitely need ETH for any transaction.

The situation is similar with the BNB Smart Chain blockchain. If your token, for example CAKE, BUSD or XVS, operates on this blockchain, you need a small stock of BNB on your wallet to successfully send any transaction.

  • Gas is needed for any action on the blockchain: creating a smart contract, interacting with a smart contract, creating an NFT, sending an NFT, and more.
  • Fees in blockchains are not always fixed. A user can pay more Gaza to speed up a transaction.
  • You don’t always have to pay a commission in ETH to send ETH. If you have ETH tokens that are moved to the BSC blockchain, you need BNB to send within that blockchain. If you have Bitcoins on the Ethereum blockchain, such as WBTC, then you need to pay not BTC but ETH to send them. The logic is the same: Gas depends on the blockchain a particular token is running on.
  • The blockchains that require the most Gas are NFTs.
  • To send USDT on the Ethereum blockchain you need ETH, to send USDT on the BSC blockchain you need BNB, to send USDT on the TRON blockchain you need TRX.
  • Most wallets have a tooltip to the right next to the tokens. If it says ERC20 in brackets next to the token name, you need ETH (ERC20) to send that token. If it says BEP20 in brackets – you need BNB (BEP20). If it says BEP2 – you need BNB (BEP2). If it says TRC20, you need TRX.

Who do we pay Gas to?

Mainers and validators play a critical role in processing and validating transactions, as well as ensuring the overall security of the network. In return for their labor, they are rewarded in the form of Gaza. It is important to note that there is a direct correlation between the security of the network and the amount of commission per transaction that miners can earn. When miners earn more, it contributes to the stability of the entire system.

It’s like a kind of cycle where an increase in miners’ income leads to an increase in the security of the network. The reward in the form of Gaza incentivizes their participation, ensuring efficient transaction processing and strengthening the overall reliability of the blockchain system. Thus, the economic incentive of miners plays a key role in maintaining the stability and security of blockchain networks.

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