What does a normal car usually need to operate? That’s right, fuel! The same goes with most cryptos, including NFTs, which operate on something referred to as Gas Fees. You might be wondering why and what is that. As usual, we’ve got you fully covered as we will be explaining to you all about the concepts of miners and NFT gas fees. We will also be talking about the link between the two, so just keep scrolling.
What are Gas Fees?
The specific unit deployed in Ethereum is known as “Gas.” It gauges the amount of “work” required to complete a single activity or a series of actions. In other words, it is the fees you pay in order to interact with the network. There are some processes that consume more computational resources and use more gas than others. We’ve got this detailed guide on gas fees if you’re interested in knowing more.
To start off, it’s important to know that Wei is the metric unit of measurement of Ethereum. 1 ETH is equal to 1 quintillion Wei and a quintillion, by the way, is a number with 18 zeros after it. One of the most popular Wei values is the gigawei (Gwei), or 1 billion Wei, and it denotes gas prices. The main formula used to calculate gas fees is:
Total Fee = Gas unit (limits) * (Base fee + Tip).
Check out this real-life example:
- Let’s pretend I want to give you 1 ETH and the typical quantity of gas needed to transfer ETH on the Ethereum network is 23,000 Gwei. That would be the gas limit I set.
- The base fee is 150 Gwei, but because I want it to reach you sooner, I include a tip of 20 Gwei.
- In this situation, our formula for a total charge would be as follows: 23,000 Gwei * (150 Gwei + 20 Gwei).
- For you to receive 1 ETH from me, I have to send the Ethereum network 1.00231 ETH.
Okay, now what are miners?
Now that we have a common understanding of gas fees, let’s figure out miners. Many cryptocurrencies, including Bitcoin, use the mining process to create a new currency and validate fresh transactions. Miners are the people to conduct the mining process, duh! Large, decentralized computer networks from all over the world are used to validate and secure blockchains.
The network’s computers receive fresh coins in exchange for using their processing power. It’s actually a winning circle. Miners uphold and protect the blockchain. The blockchain awards coins to the miners. These coins give miners incentive to maintain the blockchain. It’s a sustainable loop.
This is briefly how Mining works
Whether you like gas fees or not they are necessary for the process of mining. We’ll explain this later on, just hold the thought. In order to acquire any cryptocurrency you should buy it, earn it, or mine it! Specialized computers carry the calculations necessary to validate and log each new transaction as well as guarantee the security of the blockchain. A significant amount of computational power, which is provided by miners, is needed to verify the blockchain.
For instance, operating a large data center is very similar to bitcoin mining. Companies buy heavy mining equipment and invest in the electricity needed to run and keep it cool. The value of the mined coins must be greater than the expense of mining them in order for this to be lucrative, obviously. Every machine on the network competes to be the first to decipher a “hash,” or 64-digit hexadecimal number. The likelihood of a miner receiving the reward increases with the speed at which a computer can generate predictions.
Now, here comes the good part. The winner adds all the freshly validated transactions to the blockchain ledger. He has now added a freshly verified “block” to the chain that contains all of those transactions. As a result, he receives a specific number of recently created bitcoin. It’s interesting that this occurs around every 10 minutes and you can monitor it on Etherscan. Spoiler alert, we pay gas fees for miners who perform this whole process.
The link between miners and NFT gas fees
You now know that miners process and verify practically all transactions on the Ethereum blockchain, including NFTs. Miners need robust systems and exhaust a lot of energy during the process. In essence, you provide the miner with a “fee” for the computational work necessary to complete a transaction. This “fee” is the gas fee that we’ve been talking about earlier. Gas fees essentially act as a perk for miners. This is the link between miners and NFT gas fees.
A modest fee gives miners a negligible motive to include a transaction under normal circumstances. A higher tip will be required in order to outbid competing transactions ahead of others in the same block. The more you pay, the more you get! This is also important because miners are verifying transactions. Thus, they are providing an extra layer of security to the network and protecting data. They are also making it prohibitively expensive for spammers to use the network.
miners make Gas Fees hard to pay
People dislike gas fees not only because they hate paying fees in general, but also because they can be outrageously expensive when the network is busy. This results in higher NFT minting fees since you have to pay gas fees to mint your NFTs. Miners make it burdensome to pay gas fees because of the insane prices!
Nonetheless, it remains important to note that gas fees work well to motivate miners, which is something you now know. In return, miners will keep confirming transactions and protect network security, allowing cryptocurrencies to operate as a peer-to-peer decentralized network.
Let’s not forget that there are ways you can decrease the amount of gas fees you are paying. In general, just pick a time when the network isn’t busy and be patient. Then, set a max limit on your transactions and use layer 2 scaling solutions.