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In this article, we’ll delve into the concept of gas and its importance in the Ethereum ecosystem. You’ll learn why Ethereum relies on a system of gas to regulate the execution of transactions and smart contracts, and how it plays a crucial role in the proper functioning of the network.

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Objectives

By the end of this lesson you should be able to:
  • Explain what gas is in Ethereum
  • Explain why gas is necessary in Ethereum
  • Understand how gas works in Ethereum transactions

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What is gas?

Gas is a term used in Ethereum to describe a computational unit that measures the amount of computational work needed to perform specific operations on the network. Unlike Bitcoin, where transaction fees only consider the size of a transaction, Ethereum accounts for every computational step performed by transactions and smart contract code execution. In other words, every single operation that is performed on Ethereum requires a certain amount of gas.

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Complexity

The amount of gas required for an operation depends on its complexity. More complex operations require more computational resources and therefore require more gas to be executed. For example, a simple transaction that involves sending ETH from one address to another may require less gas than a complex smart contract that executes multiple operations or interacts with multiple other contracts.

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State of the Network

Gas costs can also vary depending on the state of the network, or more specifically, how congested it is. When there are more transactions waiting to be processed than the network can handle, it will prioritize transactions based on the gas price that was set by the user, meaning that higher gas prices are more likely to get processed first. When the network is congested, gas prices increase to encourage more efficient use of the network’s resources and decrease when network usage is lower. This dynamic pricing mechanism ensures that the Ethereum network remains accessible and functional for all users, while also incentivizing responsible and efficient use of the network’s resources.