Understand Gwei meaning & its usage 📖
Gwei was first used as a denomination of the cryptocurrency Ether (ETH), the digital coin of the famous blockchain Ethereum.
The term is a short form for Giga-Wei. Giga is denoting a factor of 10^9 while Wei is named after Wei Dai who is a great cryptographer with several significant contributions to cryptocurrency.
And so, gas prices were named after Wei Dai in honor of his services and they were introduced in 2015 with the launch of smart contracts on the Ethereum Blockchain.
| Unit | Ether Value |
|---|---|
| Wei | 10^18 |
| Kwei | 10^15 |
| Mwei | 10^12 |
| Gwei | 10^9 |
Gwei is also referred to as a Shannon. The term Shannon refers to Claude Shannon who, like Wei Dai, is regarded as one of the greats in information technology. His contributions as a mathematician and cryptographer have led him to being known as the father of information technology.
Fun fact 🎉: Ether is also referred to as Buterin – which is named after Vitalik Buterin, the creator of Ethereum.
Gwei breakdown 🧮
One Gwei is equal to 0.000000001 Ether (1 Billionth of an Ether). The smallest unit for 1 Ether is 1 Wei.
It is usual for some cryptocurrencies like Ethereum to have these denominations because of the high FIAT currency exchange rate.
As Gwei is based on the Ethereum blockchain, the price of 1 Gwei varies on the current price of the Ether token.
Let’s try an analogy 🎲
One way to best understand how Gwei is used for gas prices is to consider it like cents. Cents are handy and good for smaller purchases, for the same reason it is also helpful when measuring small values which is why they are being used for calculating gas prices.
Gwei is mainly used for the Ethereum Gas. Gas fees are important to run the Ethereum network as they allow the network to operate and helps in processing transactions. These gas fees are calculated and based on the type and complexity of the transactions.
Vitalik once proposed to charge 1 Gwei for transactions (tx) sent through wallets.
I propose we consider supporting a community norm that client/wallet devs can/should charge a 1 Gwei/gas fee for txs sent through their wallet
Vitalik Buterin, Ethereum Founder
Miners who spend their time and electricity validating transactions and blocks on the Ethereum Blockchain receive Gwei in return as a reward for their work.
During heavy network congestion, you can pay higher Gwei as gas fees to have your transaction carried out more quickly than other transactions.
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