Gas and transaction fees in Blockchain / Solidity - Step-by-Step Execution

Concept Flow - Gas and transaction fees

User creates transaction

↓

Estimate gas needed

↓

Set gas price

↓

Calculate total fee = gas * gas price

↓

Send transaction with fee

↓

Miner validates and executes

↓

Transaction included in block

↓

User pays fee from balance

This flow shows how a blockchain transaction uses gas to measure work and fees to pay miners.

Execution Sample

Blockchain / Solidity

transaction = {
  'gas_limit': 21000,
  'gas_price': 50,
  'value': 1
}
fee = transaction['gas_limit'] * transaction['gas_price']
print(fee)

Calculate the transaction fee by multiplying gas limit by gas price.

Execution Table

Step	Variable	Value	Action	Output
1	transaction['gas_limit']	21000	Set gas limit for transaction
2	transaction['gas_price']	50	Set gas price per gas unit
3	fee	21000 * 50	Calculate total fee	1050000
4	print(fee)		Output fee to user	1050000
5	-	-	Transaction sent with fee
6	-	-	Miner executes transaction, fee paid
7	-	-	Transaction included in block

💡 Fee calculated and transaction processed with fee paid to miner

Variable Tracker

Variable	Start	After Step 1	After Step 2	After Step 3	Final
transaction['gas_limit']	undefined	21000	21000	21000	21000
transaction['gas_price']	undefined	undefined	50	50	50
fee	undefined	undefined	undefined	1050000	1050000

Key Moments - 3 Insights

Why do we multiply gas limit by gas price to get the fee?

Because gas limit is how much work the transaction can use, and gas price is how much you pay per unit of work. Multiplying gives total cost (see execution_table step 3).

What happens if the gas limit is too low?

The transaction may fail because it runs out of gas during execution, but you still pay the fee for used gas (not shown in table but important).

Why does the miner get the fee?

Miners include transactions in blocks and get fees as reward for processing (see execution_table step 6).

Visual Quiz - 3 Questions

Look at the execution_table, what is the value of 'fee' after step 3?

A 21000

B 1050000

C 50

D Undefined

💡 Hint

Check the 'Value' column for 'fee' at step 3 in execution_table.

At which step is the transaction fee actually paid to the miner?

A Step 3

B Step 4

C Step 6

D Step 7

💡 Hint

Look for the step mentioning miner execution in execution_table.

If the gas price doubles, how does the fee change in the execution_table?

A Fee doubles

B Fee halves

C Fee stays the same

D Fee becomes zero

💡 Hint

Fee = gas_limit * gas_price, so changing gas_price affects fee proportionally.

Concept Snapshot

Gas measures work units for a transaction.
Gas price is cost per unit of gas.
Fee = gas limit * gas price.
User pays fee to miner for processing.
If gas limit too low, transaction fails but fee is still paid.

Full Transcript

This visual execution shows how blockchain transactions use gas and fees. First, the user sets a gas limit and gas price. The fee is calculated by multiplying these two values. The transaction is sent with this fee. Miners execute the transaction and receive the fee as payment. Variables like gas_limit, gas_price, and fee change step by step. Key points include why we multiply gas limit by gas price, what happens if gas limit is too low, and why miners get the fee. The quiz tests understanding of fee calculation and payment steps.

Practice

1. What does gas represent in a blockchain transaction?

easy

A. The amount of computational work required to process the transaction

B. The total amount of cryptocurrency sent in the transaction

C. The number of transactions in a block

D. The time it takes to confirm a transaction

Solution

1. Step 1: Understand the role of gas in blockchain

   Gas is a unit that measures how much computational effort is needed to execute operations like transactions or smart contracts.

2. Step 2: Differentiate gas from other transaction elements

   Gas is not the amount of cryptocurrency sent, nor the number of transactions or confirmation time.

3. Final Answer:

   The amount of computational work required to process the transaction -> Option A

4. Quick Check:

   Gas = computational work [OK]

Hint: Gas measures work, not money or time [OK]

Common Mistakes:

• Confusing gas with transaction value
• Thinking gas is transaction speed
• Mixing gas with block size

2. Which of the following is the correct formula to calculate transaction fees?

easy

A. Transaction fees = gas price ÷ gas used

B. Transaction fees = gas price - gas used

C. Transaction fees = gas used + gas price

D. Transaction fees = gas used x gas price

Solution

1. Step 1: Recall the transaction fee formula

   Transaction fees are calculated by multiplying the gas used by the gas price.

2. Step 2: Verify the formula correctness

   Dividing, adding, or subtracting gas used and gas price does not represent the fee calculation.

3. Final Answer:

   Transaction fees = gas used x gas price -> Option D

4. Quick Check:

   Fees = gas used x gas price [OK]

Hint: Multiply gas used by gas price for fees [OK]

Common Mistakes:

• Using division instead of multiplication
• Adding gas used and gas price
• Subtracting gas values

3. Given a transaction that used 21000 gas units and a gas price of 50 gwei, what is the total transaction fee in gwei?

medium

A. 21000 gwei

B. 1,050,000 gwei

C. 420 gwei

D. 50 gwei

Solution

1. Step 1: Identify given values

   Gas used = 21000 units, Gas price = 50 gwei per unit.

2. Step 2: Calculate total fee

   Total fee = gas used x gas price = 21000 x 50 = 1,050,000 gwei.

3. Final Answer:

   1,050,000 gwei -> Option B

4. Quick Check:

   21000 x 50 = 1,050,000 [OK]

Hint: Multiply gas used by gas price directly [OK]

Common Mistakes:

• Multiplying incorrectly
• Confusing gas units with gwei
• Using gas price as total fee

4. Identify the error in this transaction fee calculation code snippet:

gas_used = 30000
gas_price = 20
transaction_fee = gas_used + gas_price
print(transaction_fee)

medium

A. Using addition instead of multiplication for fee calculation

B. Incorrect variable names

C. Missing print statement

D. Gas price should be divided by gas used

Solution

1. Step 1: Review the code logic

   The code adds gas_used and gas_price instead of multiplying them.

2. Step 2: Understand correct fee calculation

   Transaction fee should be gas_used x gas_price, not addition.

3. Final Answer:

   Using addition instead of multiplication for fee calculation -> Option A

4. Quick Check:

   Fee = gas_used x gas_price, not + [OK]

Hint: Fees multiply gas used by gas price, not add [OK]

Common Mistakes:

• Adding gas values instead of multiplying
• Confusing variable names
• Ignoring correct formula

5. A user wants to speed up their transaction by increasing the gas price from 40 gwei to 60 gwei. If the gas used remains 21000, how much more will the user pay in transaction fees compared to before?

hard

A. 600,000 gwei more

B. 1,260,000 gwei more

C. 420,000 gwei more

D. 840,000 gwei more

Solution

1. Step 1: Calculate original fee

   Original fee = 21000 x 40 = 840,000 gwei.

2. Step 2: Calculate new fee

   New fee = 21000 x 60 = 1,260,000 gwei.

3. Step 3: Find difference

   Difference = 1,260,000 - 840,000 = 420,000 gwei more.

4. Final Answer:

   420,000 gwei more -> Option C

5. Quick Check:

   Increase = (60-40)x21000 = 420,000 [OK]

Hint: Subtract old fee from new fee to find extra cost [OK]

Common Mistakes:

• Calculating total fee instead of difference
• Mixing gas price and gas used
• Incorrect multiplication