As simple as it looks to interact with NFTs online, there’s much that goes on behind the curtain. Who is the real Wizard behind minting digital art and conducting such seamless transactions, and why do we have to spend so much money for it? Well, in reality there are actually an innumerable amount of wizards, who we, in the digital world, call “Miners”, and these Miners must get paid for the magical work that they offer us.
The term “Gas” refers to the fee that is necessary in order to successfully conduct a transaction on Ethereum. The fee, usually stored in the native Ethereum currency, Ether, is given directly to the miners who put in the computational work to verify transactions that take place on the network. It’s just like paying those guys in overalls in those old school gas station pumps on Route 66. They do the heavy lifting, and in turn, get a reward for it. All you gotta do is give them a fraction of the cost you paid, or received. Think of it like a bank charging a fee for every transfer that occurs in your account.
Image by Max Hay
Now as the NFT world vastly expands, Gas is getting quite tricky and complex, and you need to make sure you understand the constantly evolving concepts before getting caught in its web.
The quantity of Gas is denoted by the smallest denomination of ether, Wei. Named after Wei Das, creator of the predecessor to Bitcoin, B-money. One wei is practically “crypto dust”, as some experts say. One of these is equivalent to one quintillionth of an ether, as one Ethe is 10 to the 18th power wei’s. However, after getting multiplied by a couple different factors, the cost adds up, creating quite a significant amount of cash that has to be taken out of your wallet in order to buy or sell your NFTs.
There is a big conversation going on right now in the digital world about gas prices. Some think that the gas prices are becoming way too high, negatively impacting the NFT market. With high gas prices, artists might hesitate to publish and mint their works, while buyers will hold off on purchasing, creating a marketplace that isn't fulfilling all of its potential. Here’s a quick analogy of this way of thinking: If there are 10 kids in a candy store, each with only 1 dollar, but the store sells a lollipop for 2 dollars, wouldn't it be better for the store owner to sell them at a lower price and make some profit rather than sending everyone home empty handed? Some creators might also overcharge for their work, factoring in the gas into the final cost, which in turn can over-inflate the artwork's worth. You can check gas prices through many different websites, similar to this popular one, NFT Gas Station.
Image by Ali Hosseini
On the other side of the coin, don’t the miners who are creating these transactions with an exorbitant amount of demand have the right to attain as much profit as they can? With Ethereum and other digital networks becoming so vast in such a rapid amount of time with so many users, the miners need to pick and choose which transactions they want to facilitate first. And it’s common sense to assume that they’ll choose whichever projects give them the most amount of dough in return for doing the computational work. Decentralized currency comes at a cost.
So how can one go about minting, buying, or selling an NFT with the lowest gas prices possible? Well many people are working on this issue. Just as the problem gets bigger (higher gas prices), more solutions (lower gas prices) start being formulated. The easiest solution of them all is the most simple: Patience. Due to the fact that gas prices fluctuate based on a particular blockchain’s activity at a certain time, you can find out when certain networks have less traffic on them, and do your transactions when the coast is clear of thousands of other users present on the network. It’s just like Uber: going out to a bustling bar at 10pm on a Saturday is gonna cost you a helluva lot more than a 8am ride on a Tuesday. People have found that the least busy period on Ethereum is actually between 9 PM and 11 PM UTC, roughly corresponding to when people in the US have stopped working, Europe is already tucked away in their beds, and Asia is just waking up. The fewer people on the network, the cheaper the gas. Chalk it up to High School Econ for teaching you one useful thing: Supply and Demand.
Image by Lumi @lumifantasy
Other solutions are still in their experimental phase, like that of purchasing Gas Tokens, which act as a discount storage mechanism. These Tokens, which can be bought just like any other token, take advantage of the “storage refund” that the Ethereum network gives you when you free up data that was saved previously. Users stock up these Gas Tokens while gas is cheap, and then use them as gas fees rise. It’s possible for said refund to cover up to half of the transaction cost!
There’s a lot of new information coming out everyday in regard to gas fee’s, and most of it can be unpredictable. However, something we can be certain of, is that as NFTs and blockchain technology continue to rise in popularity, more and more competition will enter the marketplace, hopefully bringing with it solutions that either lower, or potentially even end this era of rising gas fees.
Stay Curious!
~NFT Art Source
Article by: Nate Galper