Ethereum Virtual Machine (EVM) Explained

According to Market Cap, Ethereum is the world’s second-largest cryptocurrency. However, what do you know about Ethereum Virtual Machine (EVM)? The EVM is a software platform that developers can use to create decentralized applications (dApps) on the Ethereum network.

EVM is beginner-friendly and eliminates the need for powerful hardware in programming. However, developers will first need a deeper understanding of the Ethereum Virtual Machine, computer terms such as memory, bytes, and stack, as well as blockchain concepts like proof of work, Merkle Tree, and hash functions. Let us go over the basics of EVM.

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The Purpose Of Ethereum Virtual Machine (EVM)

EVM exists to determine the overall state of Ethereum for each block in the blockchain. Ethereum is not too much different from other blockchain-based networks. It has its own native coin, Ether (ETH), and uses a distributed ledger to maintain a database of transactions while enforcing specific rules for how people can operate on the network. However, the platform also has an additional layer of functionality because of its smart contract capability. This second layer has been referred to as a “distributed state machine”. Ethereum’s state is a large database that holds all ETH accounts and balances at the simplest level. At the same time, Ethereum’s state is also a machine state capable of changing with each new block according to a set of predefined rules that can execute any kind of machine code. EVM defines the specific rules that determine how the machine will change state during each new block.

Understanding Smart Contracts

Ethereum is synonymous with smart contracts, having introduced them into the blockchain world, thereby expanding what was possible with distributed ledger systems. Smart contracts, in simple terms, are programs that run on the Ethereum blockchain. A smart contract exists as a type of Ethereum account. Like other accounts, they can send transactions over the network. But instead of being controlled by a user, smart contracts get deployed to the network where they function according to predefined rules. User accounts can then interact with these contracts. This can be done by sending transactions that execute certain functions defined by the contract. Smart contracts share a few different attributes, such as enforcing pre-determined rules through their code, which cannot be deleted. At the same time, transactions cannot be deleted once they have been executed.

Gas and Ethereum Virtual Machine (EVM) Performance

Every action taken on Ethereum represents a transaction. Every transaction requires fees to be processed. On the network, fees are referred to as Gas, which powers decentralized applications. During times of high network activity when many transactions take place, Gas fees tend to go up, and the fees can be ridiculously high at times. This has been one of the reasons why the development team behind the project is working hard to make the network more scalable – to reduce the amount of fees.

Data Storage on Ethereum

Data involving account balances do not directly get stored in the blocks of the Ethereum blockchain. Only root node hashes of transactions, states, and receipts are held on the chain. Data on the network is managed using tree-like data structures. There are two distinct data types on the network: permanent data and ephemeral data.

Permanent data is made up of transactions. Once a transaction is confirmed, it will be recorded in the transaction trie (tree-like data structure) and never altered again. On the other hand, the balance of an account address is a good example of ephemeral data. The balance held in an account address gets stored in the state trie and is altered when transactions are sent by or to that address. This way, permanent data like mined transactions and ephemeral data like account balances are stored separately. Think of it as a debit card - banks will track the amount of money each debit card has, and when individuals need to spend money, the bank checks its records to make sure their account has the necessary balance before the transaction is approved.

Pros and Cons Of Ethereum Virtual Machine (EVM)

Thanks to EVM, anyone can build a dApp, thus providing a standardized environment. There are also many benefits of smart contracts, such as creating NFTs that can be sold on decentralized marketplaces, thus democratizing access to the art market in a virtual way that was not possible before. On the other hand, you need some technical knowledge to make the most of EVM. Users still have to deal with high gas fees during times of high network congestion, though this may possibly change in the future with the upgrades coming up.