July 28, 2022
Merkle Tree in Blockchain
A Merkle tree is a hash tree with each non-leaf node marked with the cryptographic hash of the label of its child nodes and each leaf node marked with the cryptographic hash of a block of data. The majority of hash tree implementations are binary, which means that each node has at least two child nodes but can have many more.
Why Merkle trees?
In blockchain technology, the Merkle tree is a crucial component.
It consists of hashes from various data blocks and offers a snapshot of all transactions in a block.
It helps with data consistency and content verification.
Both the Bitcoin and Ethereum blockchains make use of this data format.
It makes encrypting blockchain data more efficient and safe.
What is the Merkle root?
A straightforward mathematical technique for verifying Merkle tree data is called a Merkle root.
In the case of cryptocurrencies, it serves as a means of ensuring that data blocks sent across a peer-to-peer network are complete, undamaged, and unaltered.
It is essential to the computation needed to maintain the functionality of cryptocurrencies like bitcoin and ether.
As seen in the diagram above, the Merkle root of the Merkle tree is the topmost node.
How Merkle trees work
A Merkle tree adds up all of the transactions in a block and creates a unique digital fingerprint of the full set of instructions, allowing the user to check whether the block contains a transaction.
Merkle trees are created by continuously hashing pairs of nodes until only one hash remains, known as the root hash or Merkle root.
They’re designed from the ground up, with transaction IDs (hashes of individual transactions) as the foundation.
Every non-leaf node hashes its prior hash, and every leaf node in the Merkle tree hashes transactional data.
Take a look at a Merkle tree in blockchain as an example to better grasp the idea.
Consider the case below: Four transactions are done on the same block: A, B, C, and D. After that, each transaction is hashed, giving you:
When these hashes are combined, they form a new hash:
As a result, the Merkle root is made up of combining these two hashes:
A Merkle tree is far more complex in reality (especially when each transaction ID is sixty-four bits long). Nonetheless, this example provides an excellent understanding of how algorithms perform and why they are so efficient and effective.
Benefits of Merkle trees
Merkle trees have four main benefits:
Validation of the integrity of data – It may be used to effectively validate the data’s integrity.
It uses a small amount of disc space – The Merkle tree takes up extremely minimal disc space relative to other data structures.
Networks with little data – For verification, Merkle trees can be split down into little chunks of data.
Quick and simple verification – The data set is compact, and validating the integrity of data takes only a few seconds.
Why is the Merkle tree so important in blockchain?
Consider a blockchain without Merkle trees to see how important they are to the system. Let’s start with an example of the Bitcoin blockchain because it makes use of Merkle trees, which makes it easier to understand.
Without Merkle trees, every node on the Bitcoin network would have to store a complete record of all Bitcoin transactions ever made. You can imagine how much information would be included in it.
Any authentication query on Bitcoin would require a large amount of data to be sent over the network; as a result, you’d have to verify the data yourself.
To compare ledgers and certify that there have been no changes, a validation system would require a lot of computer capacity.
Merkle trees are an answer to this problem. They separate the evidence of data from the data itself by hashing records in accounting.
It demonstrates that sending little quantities of data across a network is all that’s needed for a transaction to be legitimate.
It allows you to show that in terms of notional computing power and network bandwidth, both ledger types are identical.
