What is Gas and Why Do Cryptocurrency Users Have to Pay It?
One often asked question that many first time investors and users ask me is what exactly is “gas” and why it is a payment that they have to pay when performing any type of digital currency transaction.
To put it in layman’s terms gas is simply a fee that has to be paid by anyone running a transaction or any type of contract on a cryptocurrency network such as when using Ethereum for example.
The actual gas fee you will have to pay is of course depend on which cryptocurrency you choose to use and its value, however the gas price for fee when using Ethereum is around 1/100,000 of an Ether, so it is not a huge fee.
You could compare it to your electricity bill at home, each time you turn a light on, make yourself a coffee or sit down in front of the television you are going to have to pay for the amount of electricity that is used, and that is probably the easiest way to explain what a gas fee is.
So if you are thinking of buying or selling, or putting into place your own cryptocurrency contract of any type keep in mind there is always going to be a gas fee to pay, however you will find that isn’t a huge fee, but you will need to factor it into each transaction or contract you perform, so keep that in mind.
Fees Associated with Digital Currency Exchanges
Whilst one of the main benefits of using a cryptocurrency is of course that you can move money around in a relatively inexpensive way and completely anonymously, when you first set about buying any digital currency sadly there are additional fees you will have to factor into the purchase price of any cryptocurrencies you do decide to buy.
When using a digital currency exchange you will find they have their own schedule of fees and charges that you are forced to pay when for example you choose to buy any cryptocurrency using one of several different payment methods.
As such always keep in mind that those transaction and processing fees exist and what I would strongly advise you to do is to shop around and make use of a digital currency exchange that isn’t going to force you to pay ridiculously high transaction fees and charges on top of the standard gas fee costs.
You could of course always get someone else to send you a cryptocurrency direct to your digital wallet, and by doing so the only fee applicable will be the gas fee and nothing else, you can then pay that other person for that cryptocurrency in a method convenient to yourselves.
As long as you do trust the person sending you any cryptocurrency then you should not experience any problems receiving your digital currency which should show up in your digital wallet rapidly after they have sent it over to you.
Which Cryptocurrency Suits You Best
One of the decisions you are going to have to make in regards to starting to use any cryptocurrency is of course just which one is going to be the best one for you.
I am often amazed at the number of people who are still using or are about to use cryptocurrencies as a form of investment rather than use them to move money around which they were after all originally designed to be used for.
As such if you are looking to invest in a cryptocurrency rather than simply using one of them to transfer and move money around, then I think you would be best advised to use one of the mainstream ones such as Bitcoin, Ethereum and also Ripple too.
However, if you simply want to start using cryptocurrencies for investment purposes then you have lots of them to pick and choose from and you need to carefully weigh up the pros and cons of using any of them, as it is a decision you should not make lightly.
Volatility and often huge swings upwards and downwards in regards to the value of any digital currency is expected, and if you are not prepared to make a potential loss as well as a potential profit then you should never venture into the cryptocurrency environment as an investor.
But if you do fully understand the risks involved then there is nothing stopping you picking out any of the cryptocurrencies as a form of investment.