The money in our pockets doesn’t come in a single denomination. Along with the several denominations of paper bills, coins are normally an option too – especially useful for paying fractional parts of a bill.
Even for someone who doesn’t regularly carry cash, the idea that they might owe a quarter-dollar for a piece of candy probably isn’t too foreign. If they were asked to list their possible payment options for settling the debt, most would recognize they have plenty of choices. They can pay five nickels, or two dimes and a nickel, or a single quarter.
These denominations exist for convenience. A monetary system in which everyone always needed to carry around exact change in the smallest coin minted would be burdensome indeed. A system in which a large denomination was the only option would also be extremely inconvenient.
Well, with cryptocurrencies, there are no bills or coins to carry around. That doesn’t mean that discussing or even considering your money can’t get burdensome or inconvenient. This is especially true when the currency goes well beyond the two decimal places that most people are familiar with.
Few people would want the mental burden of having to relate that they paid one one-thousandth of a unit – or, worse still, of having to mentally sum the total purchase amount from twenty fractionally-priced items.
To be sure that users never have to think that hard unless they want to, forward-thinking cryptocurrencies have named denominations as a matter of convenience.
Here’s a list of common denominations from the Ethereum documentation:
As is often the case, this is a seemingly small detail that Ethereum has addressed more elegantly than its predecessor, Bitcoin.
Reference this comment from Vitalik Buterin on StackExchange.com:
… the goal of specifying suggestions for all of them was to have some schelling point on what to use for smaller denominations so that people could easily talk about varying quantities of ether regardless of whether the ETH price was $0.01, $10 or $100,000. In Bitcoin, the community is finding it hard to agree on a smaller denomination (though I suspect that the choice of 10^8 as the base denomination instead of something 10^3n also wasn’t helpful), and so we see people talking about 0.0037 BTC, etc all the time; this was what I wanted to avoid. “Millibitcoin” is hard to pronounce in a way that “finney” isn’t (also, do you really want to tell a cashier at a bank that you want to purchase “five hundred mETH”?).
TL;DR: A Gwei is a fraction of an Ether – the most commonly referenced unit when discussing Ethereum. You can call it a Gwei or you can call it a “shannon” – whatever you prefer.
Why did I choose Gwei for this site name?
…Because “Shannon” just didn’t fit me very well – so I went for the more technical unit description instead. Payments for interacting with the network (this cost is known as “gas”), are currently denominated in Gwei. This makes a Gwei a very useful unit for the Ethereum Platform. Being useful for the platform (via general education and spreading awareness) is also my goal here – so the name seemed apropos.