You must have done many Ethereum transcations in the course of time. The network deducts transaction and gas fees for every transaction on the platform. What is the difference between these two terms?
In Bitcoin Blockchain, we are familair with transcation fees but when we talk about Ethereum. It’s a different ball game. Why are there Gas Fees and Transaction Fees? Gas pays for the execution of the smart contracts (Ethereum tokens).
We will try to explain not only the difference between transaction fee and gas fee but also give you tips and tricks to regulate them.
What is Transaction Fee?
Transaction is the cost of activities on the Ethereum network. It is deducted whenever a smart contract activity is done on the network. If you transfer Ethereum or any other smart contract activity the transcation fee will be deducted in ether. This fee is paid to the miner who computed the transcation.
What is A Gas Fee?
Gas fees are the payments which are made by users for the computing energy which is required to process and validate the transactions on the Ethereum blockchain.
Every transaction uses a gas fee. The units of gas used for the transaction is called Gas Unit. How many Gas Units consumed for every transactions depends on its complexity. It also depends on the number of operations performed by the smart contract.
Transaction Fee = Gas units used x price per gas unit
Price per Gas unit is the amount we are willing to pay for 1 Gas unit.
What Is The Difference Between Transaction Fee And Gas Fee
All the computational and operational work for runing the smart contract or transcations in the eth network are paid in ether.
However, gas is a unit used in measuring this computation work which is measured in Gwei. Some amount of gas is always charged for every operation in Ethereum network.
Multiply the gas price with the gas limit to get the total cost of your transaction (gas limit * gas price).
Gas Limit: It is the maximum amount of units of the gas which you are willing to spend on a transaction.
Gas Price: It is the amount of Gwei you are willing to spend per unit of gas.
How To Reduce Gas Fee
There are times when the traffic is low in the Ethereum network. If you do the transaction in such times you will pay comparatvely less gas fee. You can use https://txstreet.com/ to view the real time traffic.
Next you can install Ethereum gas price chrome extension. This will show you the current gas prices and you can make your transactions when you see low recommended fee.
Another thing I have noticed is that usually the traffic is low from 8:00 PM to 11:00 PM UTC time. This is a good time for your transactions.
To check out the gas prices, you may visit this website