What it means
Just as a dollar can be divided into cents, ether can be divided into smaller parts. The smallest part is a single wei, and one ether equals 10 to the power of 18 wei.
Software works in wei so that all calculations are done with whole numbers, which avoids rounding errors that would otherwise build up across millions of small transfers. People rarely quote prices in wei because the numbers are too long.
A more common unit is the gwei, short for giga-wei, which equals 1,000,000,000 wei. Network fees are usually stated in gwei, and the price per unit of computing work rises and falls with demand for space on the network.
Transaction fees on the network are called gas. Each action, such as a simple transfer, uses a set amount of gas, and the sender pays a price per unit of gas stated in gwei.
The fee therefore equals the gas used multiplied by the price per unit of gas, converted from gwei into ether and then into dollars. For finance teams, wei matters mostly when reading technical records or reconciling blockchain transactions.
Amounts in a report may appear in wei and need to be converted into ether, and then into dollars, before they are meaningful to a manager. Failing to divide by the right power of ten is a common cause of large errors in spreadsheets.
Software tools usually show a friendlier unit, but the underlying records are kept in wei. A good habit is to keep the raw wei figure in one column and add a separate converted column beside it.
That way an auditor can trace every dollar figure back to the original blockchain record. The nuance is that wei is a unit and not a separate currency.
Its dollar value depends entirely on the price of ether, which can change quickly. It is also a term that is easy to confuse with other uses of the letters WEI, so context is important, and in this entry the meaning is the unit of ether.
In practice
Real-world examples.
Example
A developer reads a transaction record that shows a value of 500,000,000,000,000,000 wei. Dividing by 1,000,000,000,000,000,000 gives 0.5 ether. She enters 0.5 ether in the accounting system and keeps the original wei figure in a note for the audit trail.
Example
A company accepts payment in ether for an invoice. The wallet statement lists the amount in wei, and the accountant converts it to ether and then to dollars at the day's exchange rate. The conversion is recorded in the ledger for audit purposes.
Example
A treasury analyst compares the fees of several transactions at different times of day. Fees quoted in gwei are higher in busy periods. She schedules routine payments for quieter times to reduce the cost, saving a few hundred dollars a year across all the company's transfers.
Formula
Calculation
1 ether = 1,000,000,000,000,000,000 wei = 1,000,000,000 gwei
Transaction fee in ether = Gas used x Gas price in gwei / 1,000,000,000
Suppose a simple transfer uses 21,000 units of gas and the gas price is 20 gwei. The fee is 21,000 x 20 = 420,000 gwei. Converting to ether gives 420,000 / 1,000,000,000 = 0.00042 ether. If ether is trading at $2,000, the fee is 0.00042 x 2,000 = $0.84.Case study
Seen in the real world.
Tidewater Payments is an illustrative, fictional company that accepts ether from customers. Its finance assistant exported a month of transactions from a blockchain explorer and found that every amount looked enormous.
The figures were in wei, and she had treated them as ether. A quick check showed that dividing by 1,000,000,000,000,000,000 reduced a reported 2,400,000,000,000,000,000,000 to 2,400 ether.
In this illustrative story the controller added a conversion column to the template and a check that totals matched the wallet balance. The lesson is that knowing the unit of a number is as important as the number itself.
Watch out
Common mistakes.
- Reading an amount in wei as if it were ether, which overstates the value by a factor of one quintillion.
- Confusing wei with gwei, which are different by a factor of one billion.
- Assuming wei has its own price, when its value is simply a tiny fraction of the price of one ether.
Questions
People also ask.
Why does Ethereum use such a small unit?
Using a tiny base unit lets software work with whole numbers and handle very small payments without rounding errors, which matters when the same code processes millions of transactions.
What is gwei?
It is a billion wei, and it is the usual unit for quoting gas prices on the network.
Who is wei named after?
It is named after Wei Dai, a computer scientist who proposed an early form of digital money before bitcoin appeared, and the other units on the scale are also named after people.
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