A lower denomination of ether (ETH). It is a portmanteau of the words ‘giga’ and ‘wei’, and is primarily used to determine gas prices.
The Long Explanation
A unit of gwei equates to a nano unit (one-billionth) of an Ether, or 0.000000001 ETH (10-9 ETH). Measured against Ether’s lowest denomination, the ‘wei’, gwei comes up to 1,000,000,000 wei, and is otherwise known as gigawei.
Gwei is especially useful when calculating gas fees. These are fees paid for transactions on the Ethereum blockchain, which are critical to the success of transactions on the blockchain.
Gwei is at the heart of the pricing mechanism adopted for gas fees, and is used to calculate the final fees to be paid by users when they perform a transaction or execute a smart contract.
Essentially, gwei is to ETH what cents are to the US dollar, or what the sterling is to the British Pounds. It is handier for calculating small transactions – such as gas fees – allowing you measure small values without having to deal with fractions.
However, it should be noted that the gwei isn’t the base currency of the ETH. This is the wei. The table below shows all the denominations of the Ether, and their relationship to both Ether and wei.
|Denomination||Ether Value||Wei Value|
The Gwei may also be referred to by any of the following:
- Shannon (in reference to cryptographer Claude Shannon who is the father of Information Theory)