How a virtual machine works: from traditional PCs to blockchain

Why is it needed

Imagine: you need to run Windows on a Mac, but you don't want to buy a separate computer. Or you need to test code on different systems before releasing it to production. A virtual machine solves this problem by creating an isolated environment where you can experiment without the risk of damaging the main system.

On the blockchain, the virtual machine plays an even more important role: it becomes the engine that processes smart contracts and powers the entire ecosystem of decentralized applications.

How a Virtual Machine Works

Technically, this is a computer image running inside another computer. You can install an OS, save files, run applications—all of this works in an isolated environment, and the physical hardware (memory, processor, storage) is provided by the host machine.

The process is managed by a program called a hypervisor. It allocates resources so that several virtual machines can run simultaneously. There are two types:

Type 1 (Bare-metal) — installed on clean hardware, used in data centers and cloud platforms for maximum performance.

Type 2 (Hosted) — works on top of a regular OS, suitable for local testing and development.

Practical Application of Traditional VM

Safe Testing: a suspicious file, an unknown application — all of this can be run in a virtual machine. Even if a failure occurs or a virus is encountered, the main system will remain intact.

Cross-platform development: a programmer can test the application on Linux, Windows, and macOS using a single physical device.

Launching Legacy Software: some programs only work on Windows XP or other old systems. A virtual machine recreates the necessary environment.

Cloud services: AWS, Azure, Google Cloud operate on virtual machines. When creating a cloud service, a VM is deployed in the data center, hosting websites, databases, or applications.

Virtual Machine on the Blockchain: Another Story

Here it works quite differently. While a traditional VM is a sandbox for testing, the blockchain version is an execution mechanism for smart contracts.

EVM (Ethereum Virtual Machine) allows developers to write contracts in Solidity, Vyper, and other languages, then deploy them on Ethereum and any compatible networks. EVM ensures that all nodes in the network apply the same rules when interacting with contracts.

When you use a DeFi protocol like Uniswap: your transactions are processed by smart contracts running inside a virtual machine. The EVM executes the code, checks the conditions, and updates the data.

When creating an NFT: the virtual machine tracks the ownership rights of each token. When you transfer an NFT, the VM updates the owners' registry.

Different Virtual Machines — Different Approaches

Every major blockchain has chosen its strategy:

NEAR and Cosmos use WebAssembly-based virtual machines (WASM) that support smart contracts in multiple programming languages.

Sui implemented MoveVM for executing contracts in the Move language.

Solana has created its own execution environment (SVM), handling transactions in parallel and managing high throughput.

L2 rollups use specialized virtual machines, such as zkEVM, that employ zero-knowledge proofs for scaling.

Disadvantages to be Aware Of

Performance: a virtual machine adds a layer between the hardware and the code, which can slow down execution compared to running directly on physical hardware. In blockchain, this means higher gas fees and slower processing.

Difficulty: maintaining VM ( especially in the cloud or blockchain ) requires configuration, updates, and special skills.

Incompatibility: a smart contract written for Ethereum will not work on Solana without reworking. Developers have to adapt the code for each environment.

Why it is important to understand

Virtual machines are the backbone of both traditional computer systems and the entire blockchain infrastructure. They allow for the deployment of different environments, safe testing of code, and efficient resource utilization.

On the blockchain, a virtual machine is not just a tool; it is the foundation on which the entire ecosystem of smart contracts and decentralized applications rests. Even if you are not a programmer, understanding how the virtual machine works helps to comprehend the underlying mechanisms of DeFi platforms and interactions with cryptocurrencies.