What are the Gas Fees and how do they work - in plain English 

Sit tight, lock in, we’re heading into the crypto mumbles, but without the tech-heavy talk. We’ll go from the foundations to how Fees influence your daily operations with crypto. 

Why blockchains don’t run for free without any fees? 

To remain Decentralized, everything in the Crypto runs on Fees. You have this dozens upon dozens of blockchains, some work together, some do not, but they all have built-in ways to make people run the chain. 

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See, to work, blockchain needs people, and people do not work for free — this is where fees come in handy. Each blockchain — whether PoS or PoW — rewards people for being a Computing Power Provider or CPP for short. 

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There’s many names to CPP — a Miner, a Validator, a Node, a Baker, a Farmer, but essentially all they do is lend off computing power for the chain to operate. On a basic level what happens is people sharing their PC’s, notepads, server racks, mobile devices and Arduino mini-PC’s with Blockchain for a small fee. Plot twist — you can do it too, we’ll cover it in the future articles.  

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Fundamentally, PoS is about lending off a power of lightweight tech — CPU, Storage and RAM, but in 8 cases out of 10 you just stake crypto for rewards. PoW requires load-intense computations, thus you have to lend off GPU and ASIC’s (PC specialized to mine crypto) to the network and set-up a resource-heavy mining farm.  

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Fees is the Blood of Blockchains. Every transaction requires some degree of crypto to be paid — either to trigger a smart contract, perform a crypto-to-crypto swap or for simply sending crypto across the network. These fees are used to record information on-chain, so your transaction is noted by the whole network. Without fees there would be no motivation for people to run the blockchain in the first place and there would be no DeFi. 

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Here’s how Fees work in Ethereum: 

1. Say, you want to send 1 ETH to a friend;
2. You grab their ETH address, fire up Metamask, write down amount and hit «Send»; 
3. Before Metamask confirms the transaction — it displays the Fee price in Gwei; 
4. These Gwei is you making a direct payment to a Node for their time processing the transaction; 
5. Node receives your Gwei along with transaction data and then engraves it inside the next block of the Ethereum blockchain; 
6. After the Ethereum chain produces the next block — usually takes around 10 to 15 sec, and all the Nodes agree your transaction is valid to include it — your friend gets 1 ETH. 

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But how much is Gwei and what is a Gwei anyway? See, Ethereum developers were making history, so they named ETH denominations after people who made crypto possible for the future crypto kiddies to read and mesmerize about: 

• Wei: Wei Dai — inventor of Crypto++, b-money (proto-crypto) and VMAC. He was a cryptopunk before the crypto and Bitcoin became a thing. 
• Kilo-wei: Charles Babbage — a man who invented the PC in the early 18th century before Apple or Microsoft. He is The Father of computation theory and the reason you can read this article in the first place. 
• Mega-wei: Ada Lovelace — first ever programmer to date, she recognized that Babbage’s Computation Engine is more than a simple calculator and wrote code before electricity was a thing. 
• Giga-wei: Claude Shannon — Tony Stark IRL, man who made the logical Boolean gates (IF, AND, OR, XOR, NAND) which make up the CPU, the GPU and basically every electronic device capable of computations. He is also the father of AI — inventor of Theseus — and built the first device to solve Rubik’s cube. Keep in mind — all of this prior to the Digital Era, with no internet at all. 
• Tera-wei: Nick Szabo — man who explored how smart-contracts should work in 1996. He invetned Bit Gold in 1998 — a proto-crypto, and tackled the problem of Double-Spending before Ethereum or Bitcoin existed. 
• Peta-wei: Hal Finney — man who received the first transaction from Satoshii Nakamoto, also known for creating the first Proof-of-Work system before Bitcoin. 
• Ether (Buterin): Vitalik Buterin, the founder of Ethereum and man who made smart-contracts real.

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How much is Gwei? Exactly 0.0000000001 ETH. Here’s how you calculate Fee Price: Units of Gas Used * (Base Fee + Priority Fee). Say, you send 3 ETH, network load implies you have to pay up 14 Gwei + small tip of 5 Gwei to hasten the transaction. So, your transaction would cost 3*(14+5), or 57 Gwei. 

Every other blockchain may name Fees by itself. For instance, an Internet Computer Protocol calls fees «Cycles» and Bitcoin uses «Satoshi» as the smallest denominator. Generally, blockchains refer to «Gas Price» as the standard name for Fees, but your mileage may vary.    

‍How do you become a Computing Power Provider? You can actually earn by lending off your devices to the blockchain. To do that check our blog later on — we’ll publish an article covering ways you can contribute to the blockchain network later on.

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