Gwei is short for giga-wei: one billion wei, or one billionth of an ETH (10-9). It is the unit Ethereum gas prices are quoted in: when someone says "gas is at 20", they mean 20 gwei per unit of gas.
The short answer
Ethereum stores value in wei, but wei numbers are unreadably long, and whole ETH numbers are unreadably small when you are pricing computation. Gwei sits in the sweet spot: 1 gwei = 1,000,000,000 wei = 0.000000001 ETH. Gas prices land in a human range, historically anywhere from below 1 gwei on a quiet Sunday to hundreds of gwei during a frenzy.
The conversion is just moving the decimal point: multiply gwei by 10⁹ to get wei, or divide by 10⁹ to get ETH. So 25 gwei = 25,000,000,000 wei = 0.000000025 ETH.
How gwei turns into a fee you pay
A transaction's cost has two factors: how much work it does (gas units) and the price per unit (in gwei). A plain ETH transfer always consumes 21,000 gas. At a total price of 20 gwei per unit:
21,000 gas × 20 gwei = 420,000 gwei = 0.00042 ETH. At an ETH price of $3,000 that is about $1.26. Same transfer at 200 gwei? $12.60. The gas units never changed; only the gwei price did. That is why watching the gwei number is watching the fee market itself. How Ethereum gas works walks through the full mechanics.
Base fee + tip: two gwei numbers, not one
Since EIP-1559 (2021), the gas price you pay is the sum of two parts, both quoted in gwei: a protocol-computed base fee that is burned, and a small priority fee ("tip") that goes to the block proposer. Wallets show fields like maxFeePerGas and maxPriorityFeePerGas; both are gwei values.
On low-cost L2s you will see fractional gwei prices; 0.01 gwei or less is normal on Base or Arbitrum. Nothing special is happening: gwei is just a unit, and the market on those chains clears far below 1.
The name: gwei, shannon, nanoether
Gwei follows the metric convention: the SI prefix giga on top of wei, which itself honors cryptographer Wei Dai. Its older alias is the shannon, after Claude Shannon, the father of information theory, in keeping with Ethereum's habit of naming denominations after pioneers. You will also occasionally see nanoether, which is the same thing described from the other end of the scale.
Reading gwei like a local
A few anchors help calibrate: sub-1 gwei means the chain is quiet and blocks are running under target. Single digits are business as usual. Double digits mean demand; triple digits mean something is being minted, liquidated, or memed. Because the base fee moves at most 12.5% per block, spikes build and decay over minutes, not milliseconds, so checking a live tracker before sending is usually worth thirty seconds.