What is Solidity?

How does a crypto app know who is entitled to receive tokens or when a withdrawal is allowed?

Think of a vending machine: you pick a product, insert money and the machine follows specific rules. In the same way, a developer can use Solidity to write a smart contract that accepts deposits, records balances or allows token transfers. The rules need to describe both the permitted actions and who can perform them.

The code is turned, through compilation, into instructions that the Ethereum Virtual Machine (EVM) understands. The contract is then deployed to the blockchain and gets its own address. When a transaction calls one of its functions, the network executes the corresponding instructions. This execution consumes gas, i.e. units of computational work, for which a fee is paid.

Why it matters

You don’t need to know how to code to use an app written in Solidity. But when you swap tokens or deposit crypto into a decentralized finance (DeFi) service, you may be interacting with such contracts without ever seeing their code.

Solidity is also used on other EVM-compatible networks, not just Ethereum. Also, it’s a programming language, not a cryptocurrency. A project using it describes one of its technical features, not its trustworthiness.

What to watch out for

A bug in the code can allow funds to be stolen or lock them up. And because deployed code usually can’t be changed directly, fixing it isn’t as easy as updating an app on your phone. Upgrade mechanisms exist, but then what matters is who controls them and what permissions they have.

We separate transparency from security: published and verified source code lets you check what a contract does, but it doesn’t prove it’s harmless. Likewise, a security audit can find problems without guaranteeing there aren’t others.