Between January 1, 2018 and January 3, 2018, the average cost to execute a transaction on the Ethereum blockchain increased 187%. The cause was related to the increased price of “gas,” the unit of measurement used to represent the cost of running operations on Ethereum. Increased network traffic in early January put upward pressure on the price of gas as people competed for their transactions to be prioritized. Gas — as we will explore — is a fundamental and useful element of the Ethereum blockchain. It is, however, undoubtedly confusing and frustrating to manage, particularly for those beginning to transact on the blockchain.

If we compare (at a very high level) gas on the Ethereum network to the transaction fee a credit card company charges for use of a card, we can see the confusion and potential issues raised by the concept and volatility of gas and gas price. Customers nowadays never interface directly with the transaction fee of using a credit card. The cost is relatively standard, is determined by the credit card company, is hidden in the cost of the good or service, and cannot be mishandled to the point of losing your money and nullifying the transaction.

The strength of blockchain technology is the lack of a central entity that structures fees, determines penalties, and can block any transaction they wish, effectively cutting people out of the consumer economy. Asking every participant in the distributed ledger economy, however — regardless of background, expertise, frequency of use, or reason for use — to understand the technical functioning of gas to ensure their transactions are completed (and completed expediently) is not a scalable user experience. In the long run, dApp developers will find ways to simplify the user interaction with gas in order to strengthen customer experience and lower the risk of voided transactions. In the meantime, however, it is crucial we understand the basis of gas, its utility, and the reason(s) it exists.

To continue reading, visit “A Guide to Gas.”