In the Cryptocurrency World and Blockchain Technology, NFTs (Non-fungible tokens) have taken the digital kingdom to the next level. The ownership of NFT gas fees almost doubled in 2022, it reached from 4.6 billion to 9.3 billion in 2021. However, there are some important factors that we need to know related to NFT gas fees.
So, what is the NFT Gas Fee? How to calculate it? By the end of this article, you will get the answers to these questions. So, let’s get started!
What is the NFT Gas Fee?
Now, let’s zoom in on NFT transactions. When you decide to purchase a digital artwork, a collectible, or any NFT, the network needs to perform a series of operations. These operations include verifying the ownership of the NFT, transferring it to your wallet, and updating the transaction history on the Blockchain.
Before going towards calculation we need to know about what is NFT gas fees. So, when you decide to buy a digital artwork, a collectible, or any kind of NFT you have to go through from series of operations in networks. The ownerships demand some quick verifications about ownership of NFT, transferring process in the wallet, and some updating regarding transactions history on the Blockchain.
Each of the operations needs some operations for computational, and here are gas steps once more. You pay a specific amount of gas to incentivize miners, to expand your transaction over others. the more completion will come in the transaction you will need more gas for it.
How to Calculate NFT Gas Fees?
To calculate NFT Gas Fees, we need to explore two fundamental concepts: Gas Price and Gas Limit. These terms may sound technical, but they are the building blocks of understanding how much you’ll pay for your NFT transactions.
Gas Price Vs. Gas Limit
Gas Price: Think of Gas Price as the cost per unit of computational work on the Blockchain. It’s like the price of fuel for your car. The higher the Gas Price, the more you pay for each operation in your transaction.
Gas Limit: Gas Limit, on the other hand, is the maximum amount of gas you’re willing to spend on a transaction. It’s like setting a budget for your journey. If you set a high Gas Limit, you’re prepared to spend more to ensure your transaction is processed swiftly.
The gas Fee, the total cost of your NFT transaction, is determined by multiplying the Gas Price by the Gas Limit. So, choosing the right combination of these two factors is crucial.
Let’s break it down with a simple example:
Imagine you’re buying an NFT with a Gas Price of 50 Gwei (a unit of Ethereum’s cryptocurrency) and a Gas Limit of 100,000. Your Gas Fee would be:
Gas Fee = Gas Price x Gas Limit Gas Fee = 50 Gwei x 100,000 = 5,000,000 Gwei
The formula for Calculating NFT Gas Fees
Now, you may wonder how to convert this NFT Gas Fee into a more familiar currency, like Ethereum (ETH). To do this, you’ll need to convert Gwei to ETH. Here’s a straightforward formula for that:
Gas Fee (in ETH) = (Gas Price (in Gwei) x Gas Limit) / 1,000,000,000
So, in our example:
Gas Fee (in ETH) = (50 Gwei x 100,000) / 1,000,000,000 = 0.00005 ETH
This formula allows you to estimate the cost of your NFT transactions in ETH, making it easier to plan your budget effectively.