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Which of the following describes the Ethereum Virtual Machine (EVM)?

  1. A hardware component responsible for network connectivity

  2. A virtual machine that processes state transitions using smart contracts

  3. A decentralized finance platform for trading assets

  4. The primary storage system for blockchain data

The correct answer is: A virtual machine that processes state transitions using smart contracts

The Ethereum Virtual Machine (EVM) is a fundamental part of the Ethereum blockchain, responsible for executing smart contracts and processing state transitions on the network. It provides an environment in which developers can write code that can be executed by all Ethereum nodes consistently, ensuring that the results of smart contract executions are the same across the entire network. The EVM is designed to handle the complex computations and state changes required by decentralized applications (DApps) built on the Ethereum platform. When a smart contract is executed, the EVM evaluates the contract code, updates the blockchain's state accordingly, and ensures that these changes are replicated across all nodes, maintaining the integrity and consistency of the blockchain. The other options do not accurately characterize the EVM. The correct description highlights its role as a virtual machine for processing smart contracts, which is central to Ethereum's functionality and purpose as a decentralized platform.