Ethereum Virtual Machine: Everything You Need to Know

Ethereum is revolutionizing the way we think about both computing and asset ownership. To make it happen, the Ethereum Virtual Machine is fundamental to the entire Ethereum ecosystem. 

This article is a non-techy, simplified version of everything you need to know about Ethereum Virtual Machine. It will cover what it is, how it works, and its main purpose without going too deep into the weeds.

What is the Ethereum Virtual Machine

The Ethereum Virtual Machine – or EVM – is kind of a big deal. It’s what allows you to run routine blockchain transactions as well as execute smart contracts on Ethereum. Smart contracts are unique with different functions and objectives which is why EVM exists in the first place.

EVM is basically the software that runs the Ethereum network. It is also its CPU. In computing, the CPU – or central processing unit – is a physical piece of hardware that processes the instructions of a computer program. Ethereum makes this virtual by enabling its entire network to process commands without being restricted to physical hardware. Hence “virtual machine.”

Every computer connected to Ethereum runs EVM. What’s revolutionary about this is that EVM automatically updates whenever Ethereum changes states – either a smart contract is deployed or a transaction is made on the blockchain. 

A state is like a snapshot of the blockchain ledger that is constantly being updated and changed as commands are executed. This makes Ethereum more of a “distributed state machine” rather than just a blockchain. EVM is what tells you which state Ethereum is in for each block added to the blockchain. 

Think of this in terms of cloud computing. Currently, you and your team can simultaneously update a Google Doc. Pretty awesome isn’t it? Despite how revolutionary cloud computing is, it’s still limited. The updates you make are restricted to whatever document or platform you are working on. 

EVM takes this analogy a step further. Instead of only updating one document at a time, EVM allows you to change states meaning you can make a change in a Google Doc that is simultaneously made in a related Excel Spreadsheet or PowerPoint across all computers connected to the network.

It enables interoperability between unique functions and commands. Up until now, computers haven’t been able to dynamically change states like this. Humans have been needed to manually change data or post new information across different centralized data sets. EVM makes it possible for a decentralized computer network to communicate changes instantaneously in real time.

What is Ethereum Virtual Machine (EVM)? Programmer explains

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What is the Purpose of the Ethereum Virtual Machine

The Ethereum Virtual Machine is what allows smart contracts to be executed on the Ethereum blockchain (or an EVM-compatible blockchain like Polygon).

Smart contracts can have different functions depending on how they are written, hence the need for processing power that can shift as the blockchain shifts between different inputs. The EVM is what allows the blockchain to dynamically change states from block to block. 

EVM also allows developers to create apps – referred to as DApps – on Ethereum. In theory, anyone can create a DApp. Up until now, app development has been restricted by different platforms using compatible – often proprietary – software. A DApp built on Ethereum is open and can interact with other applications on the network.

One of the most well-known use cases of smart contracts is non-fungible tokens or NFTs. Each NFT represents a unique asset. Without a state machine like Ethereum, there would be no way to transact non-fungibility. Hence why NFTs didn’t exist until Ethereum came about.

EVM allows individuals to not only record the ownership of unique assets on the blockchain but to also sell them. This means artists and musicians, for example, have the ability to monetize ownership of art that previously required distribution through a gallery or record label.

Arguably one of the most important contributions of EVM is that it eliminates the need for third-party intermediaries to facilitate transactions involving assets. 

Think of this in terms of stocks. When r/wallstreetbets investors led the

GameStop Short of 2021, many retail investors – particularly those using Robinhood – found they were unable to make trades. This is because Robinhood, a third-party intermediary, could determine who was allowed to trade and who wasn’t (and they did). EVM allows anyone to execute smart contracts without needing to trust third parties, like Robinhood, to do right by their customers.

Key Takeaway

The Ethereum Virtual Machine is the software that executes transactions and smart contracts on the Ethereum network. The state changes as transactions and smart contracts change, instantaneously in real time.

EVM revolutionizes computing in much the same way Bitcoin’s blockchain technology disrupted financial transactions. The EVM is what allows Ethereum to exist as a distributed computer network with the ability to change states based on what is happening on chain.

The main contribution of EVM is its smart contract capabilities. While still in its infancy, smart contracts have the ability to computerize and automate every facet of asset ownership. In the not-too-distant future, filing for divorce and initiating a pre-nup could only be a click away.

That being said, EVM is far from perfect. Expensive Gas fees create a lot of friction for Ethereum users. Just because you can build a DApp on Ethereum doesn’t necessarily mean you should, especially if prospective users can’t stomach the fees to use it.

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