What is Gas-Costs Economics on the Blockchain?

The Gas is calculated by how complex the transaction is to be executed. And the reason why we pay in “gas” rather than “Ether” is that in this way the actual $ costs may stay constant even though Ether might get much more valuable. For example, A transaction that interacts with a contract needs 4 million gas to be executed. We offer 2 GWei per gas, which is 2*10^-9 Ether * 4 * 10^6 => 2*4*10^-3 = 0.008 Ether, or at the time of writing, this would cost us around USD5.

During network congestion, the gas price can rise. The miners always take decisions that which transactions to include in the next block and there is no unlimited amount in one block. Basically the reward the miner gets when transactions compete by gas and gas price. If we decide, for some reason, to offer 50 Gwei for the same transaction to speed it up, we’d pay: 50 * 10^-9 Ether * 4 * 10^6 = 4*50*10^-3 = 0.2 Ether or USD140. A big difference, as you can see.