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NFT Gas Fees Explained and What are They.

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NFT Gas Fees Explained and What are They.

Transacting NFTs on Ethereum can turn out to be an expensive proposition. This is due to the ever increasing gas prices. If you’re new to the NFT space, you may be curious what NFT gas is and why it’s so expensive currently. I spent some time on the blockchain myself, transacting and experiencing plenty of gas fees. Here is what I learned along the way.

NFT Gas is the term given to the fee that most NFT trading platforms charge. This is incurred to conduct the transaction or execute a contract on their blockchain platform. Gas prices in Ethereum are denoted by unit of Gwei. It is determined by the amount of traffic on the network and the computation power taken to execute a transaction.

Understanding NFT Gas.

Gas fees are payments that users have to make to compensate for the computation energy required to process transactions on the Ethereum blockchain. This is very much like the processing fees credit cards may charge for transferring money to various accounts or for paying bills.

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Gwei is the term given for a unit of gas that is used in the Ethereum blockchain. Ethereum implements something called the ‘proof of work’ algorithm. In this blockchain, validators who use special algorithms (called miners) solve cryptographic problems. Finding a successful solution to this problem enables sets of transactions to be processed and adds them into the blockchain.

Successful miners who are able to solve the puzzles get compensated for their effort as a lot of computation power is expended in solving the complex puzzles. This incentive makes them provide continued support to transactions. So, the total transaction fee will be equal to the gas limit times the gas price at that moment. 

i.e  Total Transaction Fee = Gas Limit * Gas Price

If the transaction fee is equal to the gas limit, your transaction will be executed and the entire blockchain will be updated. If the transaction fee is greater than the gas limit the transaction does not go through and is reverted.If you have a large contract and you are trying to execute it very fast, then the gas prices can be very high.

Conversely if you wait for the transaction to take its time the price can be lower. The car analogy is quite apt in explaining this. 

Imagine that the car is a transaction.

To run your car you need fuel. For processing transactions in ethereum you need to expend gas. Now imagine you are taking money from your home and getting it to a friend in a car. If there is less traffic, the amount of fuel that you will be using will be less. But if there is a lot of traffic, then the amount of gas that you will burn while stuck in the traffic jam will be much higher. The distance remains the same as in the earlier case. NFT gas prices can be viewed in a similar manner. 

Everything on ethereum network costs some gas. Gas on the ethereum network has been assigned a market price based upon the demand for resources in the network in a particular moment in time. 

This is done to ensure that there is efficiency in the network and there is best use of computational power. The main criteria for gas expenses will depend upon the size of the contract you are trying to execute as well as the speed at which you want that transaction to be completed.

If you want to reduce your gas prices, you can decide to wait longer and your cost will reduce as well. If the gas prices are too high then it is always better to wait till the price goes down. You can check the price of the gas when you are creating a smart contract and estimate the price.

As a network experiences high traffic it will be more expensive to create and buy NFTs. Gas prices keep changing but forecasting gas prices is unadvisable as well. The gas fees that is charged to you directly gets credited to the miners. This is to compensate for their work which provides the computational power to verify your transaction and ensure that it goes through.

High gas prices remain to be a major barrier for artists to sell their work online.

Why Do NFTs Need Gas?

Gas ensures that people who use the ethereum blockchain cannot spam it. It is an efficient way to maintain security. It enforces regulations so that individuals cannot use the computation power wantonly.

Gas fees are paid out to the miners and this incentivizes miners to include your transactions in the blockchain. If there are no incentives you cannot expect miners to expend their computation power to run smart contract operations. No one will do it out of goodwill. 

When you run smart contract transactions miners get crypto currency in exchange. The more the gas the miner can make, the more secure the network will be. The transaction will be fast and enough computational power will be available to conduct transactions.

What Is Gas Limit?

You can decide the maximum number of gas they want to spend on a transaction. You can set a limit on the gas price you want to expend and wait until it reaches that limit. This ensures that you have some control over the transaction expenses. If you are willing to wait then the transaction will get processed when the limit you set has been reached.

Why Is Gas A Problem For Artists?

You need to understand that gas fees are the price you pay to create, buy, and sell your non-fungible tokens. However, this has caused many issues for aspiring NFT creators. So, why is gas such a problem for artists?

When gas prices are high it becomes difficult for artists to create and sell their work. If you try to reduce your prices to accommodate the gas prices then the perceived value of the artwork is diminished. Since gas prices differ from the actual valuation of the digital assets, costs may be much more than the actual cost of the the assets you’re selling.

It is not just the sellers, buyers also face issues with gas prices. Buyers have to pay gas prices whenever they place an order or cancel one. Actions such as making a purchase or transferring the NFT to another wallet will incur gas fees. This is again based on the speed of the transactions that they want.

New sellers on the platforms are usually unaware of this and end up not earning much or even losing money on their transactions. If the gas is not adequate then the transaction will get reverted and you will get charged for that as well.

For example imagine you are executing a contract or transaction on Ethereum which is worth around 20 ETH. If the gas price is not sufficient and your transaction does not go through you will get 20 ETH minus the gas expended in the failed transaction.

How Are NFT Gas Prices Set?

When it comes to determining the price of NFT gas, it’s similar to how we determine the price for most things in the world. So, what all goes into deciding the price of NFT gas fees?

The pricing value of ethereum gas depends upon the supply and demand in the network. If there is high demand for transactions, this requires more miners to complete complicated algorithms creating more work and energy consumption; hence increasing the gas fee. If the gas price does not meet the threshold power it cannot process the transactions.

Tips To Avoid Paying High Gas Fees.

Gas fees may be a pain for many artists and users of the Ethereum blockchain, but someone has to pay for all the work and energy it takes to verify a simple transaction. I’ve paid some premium fees for purchasing NFTs, which made me want to find ways to avoid paying high gas fees ever again. Although gas fees can still range high, here are some top tips to avoid paying high gas fees when transacting on the Ethereum blockchain.

  • Transact either very early in the morning or late at night when there is less demand and lower gas fees.
  • Other blockchains can be used. Blockchains such as WAX( Worldwide Asset Exchange) do not require gas and transactions are instantaneous.
  • You can set a Gas limit (amount that you’re willing to pay) this will lead to your transaction getting processed only when it is profitable for a miner to process it.
  • You can keep track of the gas prices to have an estimate of the price for time that you want to run your transaction. ( Note: This is not possible for time sensitive transactions)

If the issues with gas prices are not sorted out the opportunity and promise that NFTs hold out cannot be fully utilized. It is time for the best blockchain experts to put their heads together and come out with a way in which exorbitant gas prices can be avoided. It has to be a Win-Win for everyone. 

The good news is that there is a lot of work going on in resolving this. Ethereum has been thinking of moving from the proof of work to a proof of stake model. Here, transactions need not be conducted so that computational energy can be conserved. This requires some more thinking through and persuasion of the stakeholder but it is definitely a possibility.

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Bitcoin

When will Bitcoin Rally Start? Technical Analysis:

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When will Bitcoin Rally Start? Technical Analysis:

Bitcoin dropped today after briefly kissing the $59900 and as the selling pressure rose it dropped swiftly and the slump continues. The question is when will the Bitcoin rally start?

When will Bitcoin Rally Start? Technical Analysis:

TradingView Bitcoin Chart

Bitcoin Rally: Technical Analysis

The Bitcoin price today is $54,346.67 USD with a 24-hour trading volume of $42,612,427,726 USD. Bitcoin is down 7.79% in the last 24 hours. The current CoinMarketCap ranking is #1, with market cap of $1,026,280,520,107 USD. It has a circulating supply of 18,883,962 BTC coins and a max. supply of 21,000,000 BTC coins.

Bitcoin has found its support at fib -0.65 and has an increased volatility today. Bitcoin is currently trading below EMA 20 on an hourly chart which indicates that the Bearish trend is volatile. The relative strength indicator shows that Bitcoin has entered an oversold situation. This means that now it should start getting the buyers in and the price should rise to the previous highs of yesterday.

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26 % of the Crypto investors are in NFTs

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26 % of the Crypto investors are in NFTs

The decentralized era of Blockchain assets – Cryptocurrencies and NFTs are revolutionizing the traditional centralized financial systems by rooting out almost all their problems straight away in a single solution. In this digital era, we face the problems of authenticity, origin, and verification of digital files which is not possible without being on blockchain.

Non-fungible tokens (NFTs) address such problems solely and transparently so that the idea could only belong to its origin through proof of ownership.

investors tired NFTs

26 % of the Crypto investors are in NFTs

In Japan there held a survey to check what percentage of people already in cryptocurrency holds NFTs. We will put here stress on the fact that the cryptocurrency traders and investors are the first in the line those who understand the NFTs and their potential profits. The report shows that one out of four people holds NFTs, 26% to be exact.

The survey was conducted by Major Japanese crypto exchange BitBank to estimate the mass adoption of NFTs by the people who completely understand the idea. Out of this 26% of people holding NFTs, 39% revealed that they never sold their NFTs and they are holding these digital assets and they are not aware of the actual value of their NFTs. 22% of these people holding the digital assets were aware of the actual price of what they own.

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Hackers using Google cloud accounts to Mine Cryptocurrency

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Hackers using Google cloud accounts to Mine Cryptocurrency

Google provides 2 giga bytes of free cloud storage to each Google account holder. Users can buy the premium access to more storage up to 100 giga bytes. Google provides two factor authentication to it user for added security. Hackers have found the vulnerabilities and used the Google Cloud accounts to install the third-party software for mining.

Hackers using Google cloud:

Hackers using Google cloud accounts to Mine Cryptocurrency

Due to poor customer security practices the hackers take up the control of their accounts to install the mining software under 30 seconds. This pirated software then uses the resources of computer including CPU, GPU and Storage to server for their mining on Chia Network. According to a report, the percentage of hacking for mining purposes in Google Cloud storage is 86% related to crypto mining and only 14% for other cases. According to cybersecurity the error is not at the end of Google side. The hacks are due to poor customer security practices.

Remember to always use Two factor authentication and not download any pirated software as anything that seems free comes at a greater cost.

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