Merkle Tree

tl;dr: A Merkle tree is a binary tree structure used to verify the contents of large data sets. In cryptocurrencies, it's used to organize and validate transactions within a block, making it efficient and secure to verify individual transactions using the Merkle root included in the block header.


What Is a Merkle Tree?

A Merkle tree, also known as a hash tree, is a data structure used in cryptography and computer science to efficiently and securely verify the contents of large data sets. It is a binary tree where each leaf node contains the hash of a data block, and each non-leaf node contains the hash of the concatenation of its child nodes. The topmost node, called the Merkle root, represents a summary of the entire data set.

Merkle trees enable secure and efficient verification of individual data elements without the need to check every data block. By comparing the Merkle root to a recalculated root using a specific data element, one can quickly verify whether the element is included in the data set or not.

Merkle Trees in Bitcoin

In the context of Bitcoin and other cryptocurrencies, Merkle trees are used to organize and validate transactions within a block. Each leaf node in the tree represents the hash of a transaction, and the tree is built by pairing and hashing the leaf nodes until the Merkle root is derived.

The Merkle root is included in the block header, allowing for efficient and secure verification of individual transactions without the need to check every transaction in a block. By comparing the Merkle root from the block header to a recalculated Merkle root using a specific transaction, one can quickly verify whether a transaction is included in a block or not.

This structure is particularly useful in cryptocurrencies as it helps maintain the security and integrity of the blockchain while also reducing the required data storage and verification resources.