The Ethereum blockchain is on a mission to become the most powerful decentralized supercomputer using gas to fuel smart contracts. Ethereum-based projects are regularly dominating the crypto news, with innovative ideas based around these new concepts and technology.
Learning about gas and smart contracts can be valuable information to any crypto enthusiast, even those who aren’t interested in Ethereum specifically. Ethereum is known for paving the way for this technology, but there are many other blockchains exploring smart contracts. They all have a shared goal of evolving decentralized technologies and cryptocurrencies far beyond what they are today.
⛽️ Gas: Fueling the Ethereum Network
Gas on the Ethereum network is similar to gas in a car — it’s what sets the Ethereum blockchain in motion. In the context of blockchain technology, gas refers to the smallest unit of work that occurs on the network. Just like most other blockchains, Ethereum depends on nodes to secure the network by confirming transactions and completing computations. These nodes are called validators.
In order for validators to work together in a decentralized fashion, they need a way to decide what tasks should be done first. This is because Ethereum can only account for a limited number of gas units at any given time. Without both gas and a gas limit, there would be a lack of order, and the blockchain would be susceptible to spamming attacks.
Gas prevents users from spending an unlimited amount of ETH tokens on the Ethereum network. It also safeguards the network from overloading and gives people an incentive to keep the blockchain secure and running smoothly.
Gas is not a reward. Gas is considered Ethereum’s base units of work. Rewards are attached to the gas price in the form of tokens, called GWEI. GWEI is an incentive to validators, who prioritize work that is assigned a greater reward. In addition to knowing what work is most valuable, a validator also needs to know how much work is being requested. This is represented by the gas limit. Many wallet apps set the limit for the user, so it’s not something the average crypto user may be aware of when performing transactions. If the gas limit is too low, transactions will not be prioritized. If the gas limit is too high, the excess gas is returned to the user once the transaction is complete.
👨🔧 Smart Contracts Defined
A smart contract enables an agreement between two parties to exchange value, without the need for a middleman. That value could be anything from money, property, shares, or copyrights. These contracts are both automatic and self-executing.
From a technical standpoint, programmers create smart contracts using a language called Solidity. The basic principles of a smart contract follow an if-this-then-that logic. This ensures that the final outcomes defined by a smart contract don’t execute until every single condition outlined by that contract is satisfied.
EX. A homeowner selling a property is a real-world use case for smart contracts. Selling property demands a large amounts of paperwork and can be very complex. It requires a lot of communication between the buyer and seller, and the risk of fraud definitely needs to be accounted for. With the high price on real estate and the potential to be the most costly purchase an individual will ever make in their lifetime, real estate agents and escrow services need to be involved in facilitating the transaction. Real estate lawyers often assist in filing the paperwork. That means three different intermediaries participating in the transaction earn a commission or a fee because the buyer and seller would like to make an exchange of value.
A smart contract can replace the escrow services and third parties involved, leaving more money in the pockets of the buyer and seller. Considering agents, lawyers, and escrow services can end up with anywhere from 5% to 10% of the real estate transaction, the cost savings from using a smart contract can be quite significant.
🚦 Launching Smart Contracts With Gas
Every bit of work carried out on the Ethereum blockchain requires gas. Generally, in crypto work usually refers only to validating transactions. In regards to the Ethereum blockchain, work refers to both completing transactions and running decentralized applications and smart contracts.
The amount of gas a user needs to execute a smart contract depends on how large and cumbersome the contract is and how fast the user wants it executed. If a user is willing to wait, they can pay less in gas. If they want the contract completed quickly, the user can pay a higher amount of gas.
🏁 Driving Change in Blockchain Technology
Ethereum is the pioneer of smart contracts, making the network a prime example of a smart contract platform. But as mentioned earlier, there are many blockchains making advances with smart contract technology.
EOSIO offers smart contract capabilities and ranks in the top 10 among all cryptocurrencies and market capitalization. Though it is smart contract friendly, EOS is focused on offering transaction speeds that surpass all other blockchains.
Tezos offers a “self-amending” cryptographic ledger that can adapt to whatever the world needs with participants in the network voting on what should happen next.
Stellar wants to disrupt international remittance, allowing users to replace services like Western Union and MoneyGram and complete transactions instantly at almost no cost.
🏎💨 Start Your Engines
Ethereum’s founders were the first to realize that blockchains could handle more than just basic payments. Now, other builders in the crypto space are quickly catching on to new ideas and concepts like smart contracts. With further development and interest from a variety of industries, this tech may just be a gateway to mainstream adoption.