Understanding Virtual Machine (VM): The Core Technology Behind Blockchain and Cloud Computing

VM is a Digital Bridge Transforming How We Work

Have you ever wondered how developers can run Windows on a MacBook without changing hardware? Or how decentralized applications like Uniswap can operate stably across hundreds of thousands of computers simultaneously? The answer is that VM is a technological solution that makes all of this possible.

VM is software that creates an independent computing environment within your physical system. In other words, you can imagine a VM as a computer within a computer—a digital world that is completely isolated yet runs on the same hardware.

How VM Is a Practical Solution for Various Needs

Imagine you want to try out the Linux operating system without buying a new computer or partitioning your hard drive. VM makes this as simple as downloading a file and clicking run. You can install different OS, store documents, run applications, and connect to the internet—all within a virtual environment isolated from your main system.

Practical advantages of VM:

• Safely test new software without risking damage to the main system
• Run legacy programs incompatible with modern OS
• Isolate malicious or suspicious applications from the host computer
• Enable developers to test code across multiple platforms simultaneously
• Support cloud infrastructure powering modern internet

Technical Mechanism: How Do VMs Work from Within?

Behind the scenes, a component called a hypervisor manages everything. The hypervisor is a smart resource manager—it takes CPU, RAM, and storage from your physical machine and allocates them so multiple VMs can run concurrently without interfering with each other.

There are two main types of hypervisors:

Type 1 Hypervisor (Bare Metal): Installed directly on hardware without an underlying operating system. This type powers data centers and cloud platforms—designed for maximum performance and high resource efficiency.

Type 2 Hypervisor (Hosted): Runs on top of a regular operating system like a typical application. More suitable for local testing and development environments, as it’s easier to set up but slightly slower.

Once configured, you can start a VM just like turning on a real computer—install software, browse the internet, or develop applications.

VMs in the Blockchain Ecosystem: More Than Just Containers

VM is a technology that plays different roles in the blockchain world. While traditional VMs are separate sandboxes, blockchain virtual machines serve as engines that run smart contracts on decentralized networks.

Ethereum Virtual Machine (EVM) is the most famous example. EVM allows developers to write smart contracts in various languages (Solidity, Vyper, Yul) and deploy them on Ethereum and all EVM-compatible blockchains. Its crucial function is to ensure that every node in the network applies the same rules when executing smart contracts—this is what makes blockchain decentralized yet consistent.

However, EVM is not the only option in the blockchain industry. Each blockchain implements its own type of VM according to its design philosophy:

• NEAR and Cosmos adopt WebAssembly (WASM) as their foundational VM, providing flexibility for smart contracts written in various programming languages
• Sui uses MoveVM— a specialized VM optimized for executing Move language smart contracts with a focus on security
• Solana implements a custom execution architecture (SVM) that processes transactions in parallel and handles high throughput

These different VM choices reflect trade-offs: speed versus security, scalability versus decentralization, and flexibility versus optimization.

VM Is the Hidden Technology Behind Every DeFi Interaction

When you swap tokens on a DEX or mint an NFT, you are actually interacting with a VM working behind the scenes. Let’s look at how it works:

DeFi Transactions: When you exchange tokens via a decentralized exchange protocol, your smart contract runs on the EVM. The VM executes the transaction logic—verifying your balance, determining exchange rates, transferring tokens, and updating the blockchain state.

NFT Minting: When you mint an NFT, the VM runs a contract that tracks ownership of each token. Every transfer or purchase updates the ownership history and ensures data accuracy on the ledger.

Layer 2 Solutions: Many Layer 2 rollups use specialized VMs like zkEVM—VM components that enable zero-knowledge proofs while still executing Ethereum-compatible smart contracts.

Challenges and Limitations to Understand

Although powerful, VMs have some inherent weaknesses:

Performance Overhead: VMs add an abstraction layer between code and physical hardware. This means execution is slower and resource consumption is higher compared to native code. In blockchain contexts, this results in more expensive and slower transactions.

Operational Complexity: Maintaining VM infrastructure—especially in cloud or blockchain networks—requires specialized expertise. Setup, patching, monitoring, and troubleshooting demand tools and deep knowledge.

Compatibility Fragmentation: Smart contracts written for EVM are difficult to port to Solana or other blockchains using different VMs. Developers need to rewrite or refactor their code, which increases development time and bug risk.

Conclusion: VM Is the Foundation of Modern Infrastructure

From desktop computing to cloud infrastructure and blockchain networks, VM is an unseen yet fundamental technology. VMs provide flexibility to run multiple systems on a single hardware, security by isolating applications, and consistency by ensuring code runs identically across different machines.

In the blockchain era, understanding how VMs work helps you grasp why Ethereum differs from Solana, why transaction costs vary, and how Layer 2 solutions achieve scalability. This technology is the “backbone” that enables decentralization and smart contract economies to function.