How the virtual machine works on-chain and on regular computers

What is a virtual machine and why is it needed

The virtual machine (VM) is an isolated environment that emulates the operation of a full-fledged computer within another device. It can run its own operating system, applications, and access the internet, but all of this operates based on the resources of the host machine.

In simple terms, a virtual machine is a software solution that allows you to use different operating systems without purchasing separate hardware. Do you need to test Linux on a MacBook or run specialized software? A VM creates a safe sandbox for experimentation without the risk of damaging the main system.

Architecture: how it all works

The central place in the operation of the virtual machine is occupied by the hypervisor — software that allocates physical resources (processor, RAM, storage) among multiple VMs simultaneously.

There are two types of hypervisors:

Type 1 (Bare-metal) - run directly on the hardware, used in data centers and cloud platforms. Provide maximum performance.

Type 2 (Hosted) — launched as applications on top of the OS, suitable for local testing and development.

Main Applications of Traditional VMs

1. Cross-platform testing — developers test applications on different operating systems without switching between devices

2. Safe exploration of suspicious software — if a virus gets into the VM, the main system will remain protected.

3. Running legacy software — some programs only work on older systems; VM allows recreating the necessary environment.

4. Cloud infrastructure — services like AWS, Azure, Google Cloud operate precisely based on virtual machines.

VM in Blockchain: Another Level of Functionality

Unlike traditional virtual machines that isolate different operating systems, blockchain VMs serve as a mechanism for executing smart contracts on distributed networks.

Ethereum Virtual Machine (EVM) has become the industry standard. It allows developers to write contracts in Solidity, Vyper, and Yul, and then deploy them on Ethereum and compatible networks. The EVM ensures that every node in the network applies identical rules when interacting with contracts — this ensures data consistency.

Other blockchains use their own implementations:

• NEAR and Cosmos use WebAssembly (WASM) — this allows writing smart contracts in multiple programming languages.

• Sui uses MoveVM, optimized for contracts in the Move language, focusing on parallel execution.

• Solana utilizes its own execution environment (SVM), processing transactions in parallel and handling extreme network loads.

How the virtual machine works with DApp and DeFi

Each time you interact with decentralized applications, the VM operates in the background:

On DeFi platforms — when you exchange tokens through protocols like Uniswap, smart contracts in the EVM handle the transaction and update balances.

When creating and trading NFTs — the virtual machine executes code that tracks the owners of each token; upon transfer of the NFT, records are updated.

On Layer 2 solutions — specialized VMs like zkEVM( process transactions using zero-knowledge proofs, ensuring scalability.

Pros and Cons of VM

Advantages:

• Flexibility and control when launching different environments
• Security through isolation
• Efficient use of hardware resources

Disadvantages:

• Decreased performance due to an additional layer of abstraction
• The complexity of setup and maintenance
• Compatibility issues - smart contracts for Ethereum require reworking for Solana or other blockchains
• Higher requirements for computing resources

Practical significance

Understanding how a virtual machine works helps to better understand the infrastructure of modern fintech platforms. From managing cloud services to the functioning of decentralized applications, VMs play a key role everywhere.

Even without deep technical knowledge, it is useful to know that most processes in blockchain operate thanks to virtual machines that ensure reliability and consensus in distributed networks.