Our social media timelines are filled with topics like cryptocurrency, NFTs, and blockchain technology. The art world and digital finance are dominated by crypto and blockchain technology. The Ethereum blockchain is one of the most widely used platforms for enabling digital ecosystems in the arts and finance. How does Ethereum work? The answer is in its Ethereum Virtual Machine (EVM).
What is a Virtual Machine?
A virtual machine is a system designed to work across multiple devices. Virtual machines are built on top of the operating system, emulating a computer, unlike others like macOS or Windows. A node helps it be used on any device, making it versatile. Virtual machines are highly compatible with a decentralized system as they run on different types of hardware.
Ethereum virtual machines allow you to overcome geographical challenges. If the system is part of a virtual machine network, you can use the processing power of a virtual machine regardless of location. The virtual machine can use all nodes in its network to complete tasks, making it a world machine. VMs enable you to create simple applications without a centralized system.
What makes Ethereum virtual machines unique?
All blockchains operate on a virtual machine system. The most popular cryptocurrency, Bitcoin, uses a virtual machine to manage transactions. The scope of the Ethereum virtual machine makes it unique and sets it apart from other blockchains.
The Ethereum virtual machine can enable smart contracts. EVM is not any decentralized ledger. EVM enables you to create dApps, or decentralized apps, using the Ethereum blockchain. The virtual machine requires more layers of functionality to do more. A distributed state machine is the second layer of functionality.
The Ethereum blockchain stores data as well as account information for contracts. This phase is known as the machine state. Adding a block to the blockchain changes the machine state. Predetermined rules are followed to change from one state to another. These rules are defined and governed by the Ethereum virtual machine.
EVM Smart Contracts
Smart contracts are defined by codes instead of words and are simple agreements between parties. Smart contracts are executed without the supervision of a third party. Smart contracts allow you to enter into agreements with anyone around the world anonymously.
Ethereum virtual machines are crucial to enabling a smart contract. Contracts are like accounts instead of simple transactions. These smart accounts operate based on their codes and are not controlled by users. The smart contract automatically executes its function after certain conditions are met.
Special features enable a contract to work. Some of them are listed below.
Isolated: Smart contracts are isolated from the rest of the network. This feature is important to ensure any hacks or bugs in the contract do not affect others.
Deterministic: A contract performs the same function every time after a set of inputs. This feature is essential so that smart contracts work as expected every time and there are no malfunctions.
Irreversible: There is no option of getting out of a smart contract once you enter one. Hence, making it irreversible.
Gas Prices
As mentioned earlier, the Ethereum virtual machine is like a world machine. But what stops someone from using the world machine all the time? One user using it will result in less power for others, as all machines have limited bandwidth. This unlimited access will result in misuse if there are no checks in the system. Gas prices are beneficial as they act as checks in the system.
Any process or action on the Ethereum network is a transaction. Users pay a gas price to make these transactions on the Ethereum network. Hence, using an Ethereum virtual machine is not free. Gas prices rise when there is a higher load on the blockchain network. High gas prices discourage others from transacting. The system can adjust itself to make sure more users access the network.
This automatic adjustment ensures more efficient contracts. Some time is needed to execute any contract. More resources and gas are used if a contract takes more time to complete. Gas prices are high for contracts that take too long to complete. Efficient contracts make the Ethereum network more efficient and need low gas prices.
Drawbacks of the EVM
While the EVM allows users to create unique apps and experiences, it also has drawbacks.
- High gas prices: Gas prices can rise quickly if there is high network usage and high demand. Users will need to wait for the prices to come down if they make small transactions. The functioning of a contract is slower when the fee is high.
- Centralized network: Many nodes in the Ethereum network are on centralized services like Amazon web services. All cloud computers can be down if the service provider has an outage, resulting in fewer nodes to carry out transactions.
- Technical knowledge: Ethereum virtual machines are not easy to use. You need programming knowledge and experience to create something using EVM. Many attempts to make it more user-friendly have happened to use Ethereum’s tools, for example, simple NFTs. However, the Ethereum network is used mostly by users who can code.
Final thoughts
You can create unique digital experiences using the powerful tools of the Ethereum Virtual Machine. It allows you to create contracts and enter into agreements across borders. EVM also enables transactions. The functioning of the Ethereum virtual machine is disrupted by issues like lack of decentralization and high gas prices. The Ethereum virtual machine can only become full-proof once these issues resolve.
