In Ethereum network slang, Gwei is also sometimes referred to as shannon, after American mathematician and computer scientist Claude E. Shannon. Shannon is credited with laying the foundation for information theory. But Gwei is not the only measure of small amounts of Ether. Here’s how it stands in the hierarchy of Ether units: Depending on the transaction, you may be able to pay more Gwei for a faster transaction or less Gwei for a slower transaction. For example, the dollar value of 50 Gwei today may not be the same as 50 Gwei tomorrow. You can calculate the value of Gwei at any time based on the current Ethereum price. The gas fees paid for Ethereum transactions also vary. When the Ethereum network is congested, gas prices go up. When there’s less demand for transactions and the network isn’t busy, gas fees are lower. That variation is in addition to options you have to send your transaction faster or slower, driving costs up and down.
Do I Need Gwei?
If you transact on the Ethereum network in any way, you’ll have to pay gas fees, which requires Gwei. If you own any Ether today, you already have Gwei. If you own one full Ether coin, you could say that you’re a Gwei billionaire, as one ETH is the same as 1,000,000,000 Gwei. If you use Ethereum, any ERC-20 token, or any other transaction type on the Ethereum network, you need Gwei to pay the fees.
Alternatives to Gwei
While there is no alternative to paying Gwei when transacting in Ethereum, other cryptocurrencies and networks have far lower costs. For example, Stellar, Dogecoin, Monero, Cardano, and Litecoin offer lower fees than Ethereum for most transactions.
What It Means for Individual Investors
For individual investors, the cost of transacting on the Ethereum network can be significant. For example, In December of 2021, the average gas price on the Ethereum network was 106 Gwei. In July 2021, it was just 40.66 Gwei. That’s a huge variation, so timing your transactions for lower costs can yield significant savings. It’s also worth noting that a set of major upgrades to the Ethereum network in 2022 and 2023 are intended to speed up transactions and lower costs.
