Why Do VMs Become the Backbone of Blockchain? A Complete Guide to Virtual Machines

What You Need to Know

The (VM) virtual machine is not just an ordinary computer technology—it’s the core of all blockchain transactions you perform every day. VM allows you to run various operating systems or applications on a single device without additional hardware. More importantly, VMs like the Ethereum Virtual Machine (EVM) enable smart contracts and DApps to operate stably across the global network. While flexible and powerful, VMs also come with trade-offs: performance issues, resource consumption, and operational complexity.

What Does a Virtual Machine Look Like?

Imagine you want to run Windows on a MacBook without changing the original system or buying a new computer. That’s what a VM does—it creates an independent environment where different OSes and applications can run safely.

Technically, a software called a hypervisor manages everything behind the scenes. The hypervisor takes physical resources of your computer (CPU, RAM, storage) and divides them so multiple VMs can use them simultaneously.

There are two main types of hypervisors:

Type 1 (Bare-metal server): Installed directly on hardware, usually in data centers or cloud platforms. Optimized for maximum performance and efficiency.

Type 2 (Hosted): Runs like a regular application on your operating system, suitable for testing and development.

After setup, you can run VMs just like real computers—install software, browse the internet, or develop applications.

Why Do People Use Virtual Machines?

Testing OS without risk: Try different operating systems in an isolated environment without changing your main computer.

Isolating risky software: Need to open unknown files or untrusted applications? Run them in a VM—if malware or crashes occur, your main computer stays safe.

Running legacy software: Some programs only work on older OSes like Windows XP. VMs can reproduce those environments.

Development and testing: Developers can test code across multiple OSes simultaneously, simulating how new applications will run in different environments.

Supporting cloud services: AWS, Azure, Google Cloud—all built on VMs. When launching a cloud instance, you’re turning on a VM in a remote data center.

VMs in the Blockchain World: What Matters

While traditional VMs function as separate sandboxes, blockchain virtual machines act as execution engines for smart contracts on the blockchain network.

The Ethereum Virtual Machine (EVM) allows developers to write smart contracts in languages like Solidity, Vyper, and Yul, then deploy them on Ethereum and other EVM-compatible networks. EVM ensures that every node in the network follows the same rules when creating or interacting with smart contracts.

Various blockchains have their own VM strategies according to their design. Some focus on speed and scalability, others prioritize security or developer flexibility.

Networks like NEAR and Cosmos use WebAssembly (WASM)-based VMs, supporting smart contracts in multiple programming languages. Sui uses MoveVM for executing smart contracts written in Move. Solana has its own Solana Virtual Machine (SVM) designed to process transactions in parallel and handle high network activity volumes.

When You Use a VM (Unknowingly)

Every interaction with a DApp depends on a VM:

DeFi Trading: Swapping tokens on platforms like Uniswap? Your transactions are processed by smart contracts running on the EVM.

NFT Minting: When minting an NFT, the VM runs code to track ownership of each NFT. When you buy or transfer tokens, the VM updates the history to ensure ownership is always accurate.

Layer 2 Rollups: Your transactions might be processed by specific VMs like zkEVM—allowing zk-rollups to run smart contracts while leveraging zero-knowledge proofs (ZKP).

Limitations of Virtual Machines You Should Know

Performance Overhead: VMs add an extra layer between hardware and the executed code. This can slow down speed or require more computational resources compared to running applications directly on physical machines.

Complex Operations: Maintaining a VM (especially in cloud or blockchain environments) requires significant effort for setup and updates—special tools and expertise are needed.

Limited Compatibility: Smart contracts are designed for specific VM environments. Code written for Ethereum needs to be rewritten or adapted to operate on incompatible blockchains like Solana. Developers spend more time if they want to deploy the same application across different environments.

Summary

Virtual machines play a crucial role in how modern computers and blockchain systems operate. VMs enable running various OSes, testing software safely, and utilizing hardware for multiple tasks. In blockchain, VMs support smart contracts and DApps that make the DeFi ecosystem possible. Even if you’re not a technical expert, understanding how VMs work can help you better grasp what’s happening behind many tools and platforms in the DeFi space that we use every day.