What Are Gas Fees in Crypto? A Simple Guide for Beginners
Published: 9 Jul 2025
Have you ever tried sending a small amount of crypto which is maybe $20 worth of Ethereum only to get hit with a $15 fee? It feels strange, right? That’s something a lot of people experience when they start using crypto for the first time.
These extra charges are called gas fees. They’re not a scam. These are part of how blockchain systems work. But unless someone explains them in simple words, they can feel confusing and frustrating.
In this blog, we will break down what gas fees are, why they exist and how you can avoid paying too much. Don’t worry, we’ll keep it simple, use real examples and give you tips you can actually use. Ready to learn? Let’s start.
What Are Gas Fees?
Gas fees are small charges you pay when you do something on a blockchain like sending crypto, swapping tokens or minting NFTs. Think of it like a service fee for using the network. You’re not just moving money but you’re asking the blockchain to process your request and that takes work.
Real-life example:
Imagine you’re sending a parcel. You pack it up and go to the post office. You don’t just hand it over for free, they charge you a delivery fee. That’s what gas fees are in the crypto world. You’re paying for the “delivery” of your transaction.
Why Are They Called “Gas”?
The word “gas” comes from Ethereum, the most well-known blockchain that uses this system. They used the term to describe how much effort (or computing power) it takes to perform a task on the network. Just like a car needs fuel to move, the blockchain needs gas to run your transaction.
It’s not about real gasoline, it’s just a fun way to explain that computers need energy and energy costs money. So, when someone says “gas fee,” they really mean “payment for the work done to run your crypto action.”
Gas Fees and the Ethereum Virtual Machine
Gas fees and the Ethereum Virtual Machine (EVM) go hand in hand. To understand why you pay gas, it helps to know what the EVM actually does.
What Is the Ethereum Virtual Machine (EVM)?
The EVM is like the brain behind Ethereum. It’s the part of the network that reads and runs all smart contracts and decentralized apps (dApps). Every time you use Ethereum to do something like send crypto, mint an NFT or vote in a DAO, the EVM is working behind the scenes to process those commands.
Think of the EVM like a universal computer. It understands smart contract code and makes sure everything runs the way it should. But just like any computer, running programs takes power and that power is measured using gas.
How Does Gas Work Inside the EVM?
Each action inside the EVM uses a little bit of computing power. Different actions cost different amounts of gas depending on how complex they are.
- Simple actions (like sending ETH) use a small amount of gas
- Complex actions (like running a full smart contract) use more gas
Real-life example:
It’s like paying a handyman. If you just need a lightbulb changed, that’s cheap. But if you want to install a full electrical system, that’s going to cost more.
The EVM adds up all the steps in your transaction and calculates the total gas cost. Then it sends the job to the validators to process it.
Why It Matters to You
When you pay a gas fee on Ethereum, you are really paying for EVM power. The more your transaction “asks” the EVM to do, the higher your gas bill.
That’s why:
- Some NFT mints cost more than others
- Swapping tokens with extra logic (like slippage control) may cost more
- Even failed transactions can still cost gas because the EVM had to try running it
Tip: Want to use less gas? Stick to simpler actions and use dApps built to be gas-efficient.
You may want to know Top 4 Web 3.0 Development Platforms.
Why Do Gas Fees Exist?
Gas fees are not just random charges. They serve a real purpose in making sure the blockchain system works properly. When you use a blockchain like Ethereum, you are asking the network to do something like send money, run a smart contract or interact with a decentralized app. That work isn’t free.
The fee acts as a small reward for the people who help to power the network. Without these fees, transactions wouldn’t get processed and the entire system could slow down or get spammed with fake requests.
Let’s break it down further.
Who Gets the Fee?
Gas fees don’t just disappear. They go to the people who help run the blockchain. These people are called miners (on older systems like Ethereum proof-of-work) or validators (on newer systems like Ethereum proof-of-stake and other chains).
Their job is to process and confirm your transaction, making sure it’s safe and recorded properly. In return, they get rewarded with these small payments. Without gas fees, there would be no reason for them to do this work.
Simple comparison:
It’s like tipping a delivery rider. You’re paying them to get your order to you on time and safely.
What Does It Pay For?
Gas fees might seem annoying but they actually help the network in a few important ways:
- Network security: Paying validators helps keep the system honest and secure.
- Transaction processing: Your transaction gets added to the blockchain by someone running powerful computers.
- Spam protection: Without fees, people could flood the system with junk transactions. Gas fees make that expensive and discourage abuse.
So even though gas fees can feel like a hassle, they are doing real work in the background to keep everything running smoothly.
When Do You Pay Gas Fees?
You don’t always think about gas fees until you are about to make a transaction and suddenly ask to pay one. But gas fees are a normal part of using any blockchain that runs smart contracts or processes crypto transactions.
Let’s look at the situations where you will usually see these fees pop up.
Common Crypto Actions That Require Gas Fees
Any time you interact with a blockchain, you are likely using gas. Here are a few everyday actions that trigger gas fees:
- Sending crypto to someone
Example: Sending ETH to a friend’s wallet? You’ll pay a gas fee. - Swapping tokens on DeFi apps
Example: Using Uniswap to trade ETH for USDC? There’s a gas fee. - Minting NFTs
If you create a new NFT or buy one from a marketplace, you’ll pay a gas fee for that action. - Using decentralized apps (dApps)
Anything from staking crypto to voting in DAO proposals will involve gas.
Each of these tasks uses the network’s resources. That’s why you are asked to cover the cost, even if the action seems small.
Which Coins and Networks Charge Gas?
Not all networks are the same. Some charge high gas fees. Others are faster and cheaper. Here are a few examples:
- Ethereum (ETH)
Known for being powerful but gas can get expensive, especially when many people use it at once. - Binance Smart Chain (BNB)
A cheaper and faster alternative to Ethereum for everyday transactions. - Polygon (MATIC)
Very low fees. Good for games, NFTs and micro-transactions. - Solana (SOL)
High-speed and very low cost, often used for apps that need lots of small transactions. - Avalanche (AVAX)
Another fast network with reasonable fees.
Tip: When you’re choosing where to send or trade crypto, always check the gas fees first. Some wallets even show a “low fee” or “high fee” warning so you don’t get surprised.
How Are Gas Fees Calculated?
Gas fees might seem random but there’s a formula behind them. It’s based on how much computer power your transaction uses and how busy the network is.
Let’s break it down in a simple way.
The Basic Formula
Here’s how gas fees are calculated on Ethereum (after the London upgrade):
Gas Fee = Gas Units × (Base Fee + Tip)
Let’s explain each part:
1. Gas Units
This is the amount of work your transaction needs. Think of it like fuel. A simple task (like sending ETH) uses less fuel. A complex task (like minting an NFT) needs more fuel.
- Sending ETH: Around 21,000 gas units
- Interacting with a smart contract: Could be 100,000+ units
2. Base Fee
This is the minimum fee set by the network. It changes automatically depending on how busy the network is.
- Busy network = higher base fee
- Quiet network = lower base fee
It’s like surge pricing on a ride-hailing app. The more people using it, the more you pay.
3. Tip (Also Called “Priority Fee”)
This is a small extra amount you add to encourage validators to pick your transaction first. You can set it higher to speed things up.
- Low tip: Slower
- High tip: Faster
Tip: Many wallets like MetaMask automatically suggest a tip, so you don’t need to guess.
Real-Life Example
Let’s say:
- Your transaction uses 50,000 gas units
- The base fee is 30 gwei
- You set a tip of 2 gwei
Your total fee = 50,000 × (30 + 2) = 1,600,000 gwei
Now convert gwei to ETH:
- 1 ETH = 1,000,000,000 gwei
- So, 1,600,000 gwei = 0.0016 ETH
If ETH is $2,000, that’s $3.20 for the transaction.
Can You Lower It?
Yes! You can:
- Wait for lower base fees
- Use a smaller tip
- Choose actions that need fewer gas units
- Switch to a cheaper network or Layer 2
How Can You Save on Gas Fees?
Gas fees can be annoying but the good news is, you can lower them. A little planning goes a long way. Let’s look at a few smart ways to cut down what you pay.
Time Your Transactions Right
Gas prices go up when the network is busy. So if you wait until fewer people are using it, the fees often drop.
Real-life example:
Just like how flight tickets are cheaper on weekdays, crypto fees are usually lower at off-peak hours.
Tip: Try making transactions early in the morning or late at night (especially on weekends). Also, use gas-tracking websites to pick the cheapest time.
Choose a Cheaper Blockchain Network
Not all networks charge the same gas. Some are designed to be faster and cheaper than others. If you are doing lots of small actions, using a low-fee network can save a lot.
Here are some affordable options:
- Polygon (MATIC)– Super cheap, fast and easy for NFTs or DeFi
- BNB Chain– Very low gas and popular for trading
- Solana (SOL)– Known for ultra-low fees and speed
Example:
Sending $10 on Ethereum might cost $5 in gas. Doing the same on Polygon might cost less than $0.01.
Tip: Make sure the app or wallet you are using supports these networks before switching.
Use Layer 2 Solutions
Layer 2s are like faster lanes built on top of existing blockchains. They help handle more transactions at a lower cost while staying connected to the main chain.
Popular Layer 2s:
- Arbitrum
- Optimism
- zkSync
They work just like Ethereum but with much lower fees.
Example:
Swapping tokens on Uniswap via Ethereum can cost $20+. Doing the same on Arbitrum might cost less than $1.
Tip: Many wallets (like MetaMask) support Layer 2 networks and you just need to add them manually or use a bridge to move your crypto there.
How to Check Gas Fees Live
Before sending crypto or doing anything on the blockchain, it’s smart to check the gas fees first. That way, you avoid surprises.
Let’s look at one tool that’s easy to use.
Etherscan Gas Tracker (Most Popular Tool)
Etherscan Gas Tracker is one of the most trusted tools for checking Ethereum gas fees in real time.
Here’s what it shows:
- Live gas prices: Divided into low, average and high
- Estimated fees for common actions (sending ETH, using Uniswap, minting NFTs)
- Recommended gas limit and tip settings
Why it’s helpful:
You can see if fees are too high and wait for a better time to make your transaction.
Other Gas Tracking Tools (Quick Comparison)
| Tool Name | Use Case | Website |
| Gas Now | Simple gas stats (if available) | gasnow.org (may vary) |
| Blocknative Gas Estimator | Accurate gas fee predictions | blocknative.com/gas-estimator |
| EthGasStation | Fee tracking + network stats | ethgasstation.info |
| SnowTrace Gas Tracker | For Avalanche users | snowtrace.io/gastracker |
| Polygonscan Gas Tracker | For Polygon users | polygonscan.com/gastracker |
Conclusion
Gas fees might seem confusing at first but now you know they are just the cost of doing work on a blockchain. Whether it’s about sending crypto, swapping tokens or minting NFTs, gas fees are there to reward the people who help run the network.
You also learned:
- Why gas fees exist
- How they’re calculated
- What affects the cost
- And smart ways to reduce them
Remember, you don’t have to pay high gas fees if you plan ahead. Use tools like Etherscan Gas Tracker, pick cheaper networks and time your actions when the blockchain is less busy.
Crypto can feel complicated but once you understand the basics like gas fees, then you will be one step closer to using it with confidence.
FAQs about Gas Fees in Crypto
Here is the list of frequently asked questions:
Your transaction will sit in the “mempool” (waiting area) until network congestion decreases or someone with higher fees gets processed first. It might take hours or even days to confirm or it could fail entirely. Most wallets will warn you if your fee is too low and suggest a minimum amount.
Yes, but you will need to send a new transaction with the same “nonce” (transaction number) and higher gas fees to replace it. Some wallets have a “speed up” or “cancel” button that does this automatically. You’ll still pay gas fees for the cancellation since it requires network processing.
No, you don’t pay gas fees when someone sends crypto to your wallet. Only the person sending the transaction pays the gas fee. However, if you want to move or use that received crypto later, you will need to pay gas fees for those actions.
When a transaction fails, the network has already done the computational work to try processing it. Validators still used their computing power to attempt your transaction, so they deserve compensation. Think of it like paying a contractor who shows up to work but can’t complete the job due to missing materials.
In most countries, gas fees are considered part of your transaction costs and can affect your capital gains calculations. For example, if you sell crypto, the gas fee might be deductible from your profits. However, tax laws vary by location, so consult a tax professional for specific advice.
No, gas fees must be paid in the native token of the blockchain you’re using (like ETH for Ethereum). You need to have enough of that token in your wallet before making any transaction. Some exchanges or wallets might let you buy the native token with a credit card first.
No, different wallets might suggest different gas fee amounts based on their algorithms. MetaMask, Trust Wallet and Coinbase Wallet all have different ways of calculating recommended fees. The actual network fee is the same but their suggestions for tips and speed can vary.
Gas fees are paid to the blockchain network for processing transactions while exchange fees are paid to centralized exchanges (like Coinbase or Binance) for their services. If you trade on a centralized exchange, you pay exchange fees but no gas fees since the trade happens off-chain. Moving crypto to/from the exchange requires gas fees.
Some newer blockchains have very low fees (under $0.01) but completely eliminating fees is difficult because validators need incentives to secure the network. However, some experimental blockchains offer “fee-less” transactions by using different economic models or by having sponsors pay fees on behalf of users.
Gas fees don’t directly change the price of your crypto but they do reduce your overall returns. If you frequently trade or move small amounts, gas fees can eat into your profits significantly. For long-term holders who rarely move their crypto, gas fees have minimal impact on investment performance.
