Ethereum is the second largest crypto currency in the crypto sector and it is not just like Bitcoin which is only used as a payment system. Ethereum is now into smart contracts and newly created Tokens most of them are running on the Ethereum blockchain. Its a good thing though but there is something absurd happening with Ethereum:
- Gas Fees
We have seen that Ethereum gas fees has gone high and it now does not make sense at all. These days you can be charged amount which is higher than the amount you want to send. With these higher fees owning Ethereum based tokens will costs you a fortune. Lets see how does this happen and also how it contribute to higher gas fees.
What drives the Ethereum Fees?
- Block size
- Network Congestion
Since Ethereum use proof of work, the miners has to be paid. The higher the block size the costly it becomes and also transaction has to be confirmed on the blockchain. So if you want your transaction to be confirmed fast then you have to pay more since the network will be highly congested. This brings up another question,
What makes the Network heavily congested?
Whenever people are making transactions the network will be highly congested and these days this normally happens because of these newly introduced tokens which are operating on the Ethereum Blockchain so the number of transactions is heavily increasing each and everyday and that is the main reason why the network is heavily congested and driving the gas fees high.
Conclusion
If these new tokens were not operating on the Ethereum Blockchain the fees would have been normal but unfortunately this will keep on going until it moves on to Proof Of Stake
