Maybe it’s that the holidays are just around the corner, but I’ve been thinking a lot about family lately. No, not my fiat-space family with whom I will eat many, many green, tree-shaped, sugar cookies next week. Nor is it my crypto family, without whom I’d be a floundering fish left dry on the docks of this web3 revolution. Rather, I’ve been thinking about the big family of blockchains that all rely on the Ethereum Virtual Machine (EVM), the key component of the blockchain tech stack that transforms the ecosystems of Ethereum, Binance Smart Chain, Avalanche, and dozens of others from a simple decentralized ledger, like Bitcoin, into virtual computers running the decentralized applications which are powering the next generation of the internet.
As the holidays approach, let’s learn a bit more about the common blockchain ancestor that is EVM and celebrate this most-revered family member that enables much of what we do in web3.
What Is the Ethereum Virtual Machine?
When Ethereum launched in 2014, it was dubbed the World’s Computer because of the capabilities unlocked by the Ethereum Virtual Machine. Up until that time, blockchains were really just distributed ledgers, think checkbooks or spreadsheets. Granted, they were cryptographically secured ledgers, but they really just recorded wallet balances and the debiting and crediting of the native digital currency as it made its way around the ecosystem.
EVM brings an additional layer of functionality to decentralized ledger technology by layering a virtual computer on top of the blockchain. If before we thought of blockchains as distributed ledgers, now we can think of them as distributed virtual computers. The EVM keeps track of balances and transactions like a ledger, but it also enables all the smart contract functionality that we rely on in web3.
Why Is EVM Important?
In a philosophical and technical sense, EVM is important because it turned blockchain-based databases into blockchain-based computers — what’s called a ‘runtime environment’. This is a specific place where computer code can execute, in this case, smart contracts, independent of the underlying blockchain architecture. In a practical sense, EVM is important because, without it, we wouldn’t have decentralized applications, and without dApps, we wouldn’t have web3.
To be clear, there are now other blockchain-based virtual computer networks, but none of them come close to the robustness, functionality, and adoption of EVM. The Ethereum Virtual Machine is simply the gold standard for an on-chain runtime environment.
How Does EVM Work?
In an EVM blockchain, each node in the network runs a copy of the EVM. In very simple terms, the EVM reads and executes computer code in an environment isolated from the actual blockchain network. In more techy terms, EVM predicts the general state of the blockchain, which is sort of like a ‘snapshot’ of the network ledger as each block is added to the chain. In order to power the EVM engine so that it will execute the transaction, users must pay gas, which is essentially the fee to use or otherwise access the network.
For every transaction, the EVM does three things:
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It confirms that the data underlying the transaction is correct and the signature is valid
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It calculates the gas fee required to execute the transaction
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It executes the transaction
The EVM functions because it can break down computer programming languages, like the smart-contract programming language Solidity, into opscodes, which is the most basic form of computer instructions. So long as the EVM is fed enough gas, the EVM can solve any computational problem thrown at it. But beware, the more complex the computation, the higher the transaction fee.
What Are the Benefits of EVM?
The EVM is a revolutionary piece of network architecture. In particular, the benefits of EVM include:
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Turning decentralized ledger technology in all of its immutable and trustless glory into a decentralized virtual computer capable of running any computation for which the user can afford the transaction fees.
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The EVM is open-source computer code, so anyone can build a dApp (or blockchain) using publicly available software libraries.
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Protocols can take advantage of the EVM architecture to build Ethereum scaling solutions, such as Optimism, Arbitrum, and Polygon.
What Are the Burdens of EVM?
Although the EVM changes how we use blockchains, the way it’s designed does have particular drawbacks, including:
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When the network is busy, the EVM environment gets bogged down, and transaction confirmation times and network fees increase.
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The EVM cannot access real-world data, so smart contracts will always be dependent on oracles or other architecture to bring off-chain data on chain.
Not All EVMs Are Created Equal
A quick note — some EVM implementations are EVM compatible, while others are EVM equivalent. Although it’s hard to parse what this means, the simple explanation is that EVM equivalent environments are just that, equivalent to the EVM found on Ethereum mainnet and any smart contracts or dApps that run on mainnet can run on an EVM-equivalent protocol or chain. In a more literal sense, EVM equivalence means that the protocol is in compliance with the Ethereum Yellow Paper. The Layer 2 scaling solution Optimism, for example, is EVM equivalent.
In contrast, EVM-compatible environments are limited in terms of what dApps can run on the protocol or chain. Binance Smart Chain and Polygon are EVM-compatible blockchains.
EVM Is the Future of the Internet
The Ethereum Virtual Machine was the breakthrough that took blockchains from secured ledgers to virtual computers running complex computer code on chain. As we slowly build the systems that will enable a transition from the centralized infrastructure and business models of web2 to the possibilities unlocked by blockchain technology, we’ll need a computer to run all the dApps and yet-to-be invented acronyms for this new economy. Absent some technological breakthrough or seismic shift in current and anticipated blockchain adoption, EVM will be that computer upon which the future of the internet is built.
Hiro Kennelly is a writer, editor, and coordinator at BanklessDAO and the Editor-in-Chief at Good Morning News. He is also helping to build a grants-focused organization at DAOpunks.