In the words of Yakko and Wakko Warner: “Hellooooooo Nurse weekend!” It’s great to be back with you this week for a rather, *ahem*, gaseous edition of CryptoCurious.
Also, I know I promised you a post about MetaMask for this week, but that turned out to take a lot more time than I expected, so I’m going to delay that until next week. I promise to provide a flawless piece about MetaMask next week!
And before getting into this week’s post, I have some exciting news to share about CryptoCurious:
First, this isn’t exactly new, but we have a Discord! If you want to chat it up with the CC community (small but strong 💪), come join us! discord.gg/Xs293sZAkW
Next, Curiosity DAO! It was probably a mistake not to announce this first in the newsletter, but in case you haven’t seen my tweet thread (you can read it here), I’ve decided to turn CryptoCurious into a DAO!
A couple of weeks ago, I wrote “1 DAO, 2 DAO, red DAO, blue DAO” about what DAOs are and why they’re important to Web3. Shortly after that, I decided the best way to fulfill my mission with CryptoCurious — to teach people about Crypto and Web3 in an approachable and easy-to-understand way — was to give everyone the opportunity to have a hands-on experience with things like DAOs and NFTs. And yes, that’s me saying I want to do a CryptoCurious NFT collection in the future.
I’m in the process of writing the smart contracts right now and you can see some more details in the thread I linked above. If you want to check out the contracts I have in the works, they’re on my GitHub. If you want to contribute, get in touch with me on Discord or Twitter!
Now on to the newsletter….
Gaseous ETH
Let’s say you run the world’s most powerful computer and anyone can use it for whatever they want. Developers can build programs for it, entrepreneurs can build incredible companies, and consumers can buy and sell anything they want. And it’s all on one, super-powerful computer.
That’s what Ethereum is. It’s a massive virtual computer that enables anyone with a MetaMask wallet and a little bit of ETH to transact and build easily. But the only problem with making things easy is that you’ve made things easy. Anyone can build anything, which includes clever ways to hack the network and use up resources.
It’s not exactly possible to stop these people from using Ethereum, but that’s not what we want. The whole point is to build a new internet where anyone can do anything. We can, however, discourage attempts to use up resources by making it economically dumb to do so. That’s where gas comes in.
For our purposes, it’s helpful to think of Ethereum gas as similar to the gasoline that you put in your car. If you want to get something done, gas needs to be expended to do so. It’s not a perfect analogy, but it’s where the name comes from, so we’ll use it.
Note: When I talk about crypto gas, I use the term gas. If I talk about car gas for an analogy, I’ll use the term gasoline to make the difference clear.
Price is Important
Gas is kinda weird. It’s priced in a unit called gwei, which is 0.000000001 Ether (9 decimal places). As I’m writing this, the price of gas is 277, meaning 1 unit of gas costs 0.000000277 Ether or 277 Gwei. The price of Ether right now is around $4,000, so 1 gas is worth approximately $0.001108.
I can hear you saying: “Wait a minute. How are we getting charged so much for gas when it’s that cheap? Are we getting ripped off by the network?”
Those are great questions, but there’s a bit more to it. Transactions on Ethereum cost a minimum of 21,000 gas to be executed. I’m not sure why 21k exactly, but that’s the number. If you want to figure out the minimum your transaction will cost, take the gas price and multiply it by 21,000.
Using the 277 gas price (in Gwei, remember), let’s do exactly that. 277 * 21,000 = 5,817,000 Gwei for a transaction at that price. In Ether, that’s 0.005817 ETH. Using the $4,000 Ether price, a transaction costing 21k gas at 277 is worth roughly $23.27.
That still feels pretty cheap considering the prices we’re seeing. But remember, 21k gas is the minimum. As the network gets busier, the amount of gas required goes up. I tried making a listing on OpenSea to test this out. Ethereum is very busy right now, and gas is pretty high. I decided to try listing an NFT for sale and supplied 50,000 gas at a price of 150 Gwei (it’s gone down since the 277; this stuff is volatile 🤯).
After confirming that I wanted to make the transaction, it started pending verification. A few seconds later, I got an error message saying my transaction had failed. I checked Etherscan (you can see my failure here!) and it said I had run out of gas. In a short time, it used up all 50k gas I gave the miner and still failed. I ended up losing all of that 4,165,895 Gwei, or a little over $16 worth of Ether. Not very fun!
Btw, I was the only transaction on that block that failed because it ran out of gas. I’m special 😆
Gas Sucks
This is why gas gets so expensive when the network is busy. It takes more and more computational power to execute transactions when a lot of others are happening at the same time. If you don’t have the resources to pay the miners for their work, they’ll just move on to the next transaction. The price and required gas both go up at the same time and filter out those who can’t pay.
And it’s not out of capitalistic greed, it’s pure market economics. The value of the computing power goes up when the demand for it spikes, so the price increases and naturally weeds out the weaker demand.
Will it ever be cheaper?
Hopefully, it will be. The Ethereum Foundation has been working for years to pivot to a Proof-of-Stake model for mining blocks, which would make gas fees cheaper and the amount of power required to mine blocks would drastically fall. Many people aren’t very optimistic about that happening soon, though. As I said, they’ve been working on it for years and have consistently delayed the launch. But I’m an optimist and I believe they’ll do it soon!
There are also layer 2 blockchains that are far cheaper than Ethereum itself while still being built on Ethereum. One notable L2 chain is Polygon, but there are many more. You can find a list of great L2s here.
And there’s also the option of moving off of Ethereum. While Ethereum is arguably the most popular layer 1 blockchain for developers (meaning that’s where all the cool projects get built), it’s not the only one. Another favorite of mine is Solana. Cheap, wicked fast, and growing at a break-neck pace.
Some others that people love are Binance, Polkadot, Tezos, and Cardano.
Conclusion
Gas is about as miserable as its namesake, gasoline. Volatile in price because of ever-changing supply and demand and those of us who want to transact more often kinda…can’t. But like I said earlier, I’m an optimist. I tend to believe that gas will get cheaper and will find an area to level out where us poor folks aren’t too priced out.
What do you think? Is gas too expensive? Good as is? Let me know what your thoughts on the matter are; I love hearing from my readers.
And with that, I shall leave you until next week. Au revoir!