Merkle Tree in Blockchain

Merkle tree in blockchain helps verify the data integrity of transactions in a block. It is a tree data structure made up of hashes of transactions which ensures security and efficiency.

• Introduction
• What is Merkle Tree?
• How does Merkle Tree work?
• How is Merkle Tree useful in Blockchain?
• An example of Data Integrity using Merkle Tree
• Benefits of Merkle Tree
• Use cases of Merkle Tree
• Final Word

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Introduction

If you’ve been reading about blockchain technology, you must’ve seen or heard of Merkle tree. If you haven’t, no problem, you’ll get to learn about it now. Merkle tree in computer science is one of the fundamental concepts in building a decentralized, secure network. 

But, What is the Merkle tree? How does Blockchain use it? Do Bitcoin and Ethereum also use it? The article below covers all the above questions along with additional knowledge.

So, let’s begin with understanding the need for the Merkle tree.

As we know, in a decentralized network like blockchain, a copy of data is shared with all the participants in the network. Unlike, a centralized network that keeps a single copy of records to itself.

However, distributing the exact same copy of the updated record needs constant verification and data integrity. Merkle tree helps the arrangement of hashes to keep the network consistent and integrated.

Also, Read: All About Bitcoin

Let’s dig deep into this concept, starting with what is Merkle tree?

What is Merkle Tree?

Technically, the Merkle tree is a data structure used to encrypt transactions efficiently and securely. Its made up of the hashes of various data blocks of transactions. In short, it acts as a summary of transactions for a block in a blockchain network.

The structure of a Merkle Tree is a hierarchical way to represent hashes of the transactions. 

• Merkle Root (or Root Hash): Top node of the tree
• Non-Leaf Nodes: Child hash nodes of transactions in between
• Leaf Nodes: Child nodes or Transactions nodes

How does Merkle Tree work?

Merkle tree uses the concept of cryptographic hash functions and public-key cryptography to encrypt and verify the transactions among all the nodes in the network. 

Merkle tree is made up of hashing pairs of nodes repeatedly hashed until only one hash remains called the Root Hash or Merkle Root. It is built from the bottom using transaction IDs which are hashes of the individual transactions. It uses cryptographic hash functions to create digest or hash of the transactions.

In the Merkle tree structure, each non-leaf node is a hash of its previous hash. And every leaf node is the hash of transactional data of each block.

Let’s conclude the working of the Merkle tree using the below diagram.

Following are the steps:

1. Each transaction in a block is converted into a hash individually using cryptographic hash functions like SHA-256.
2. Hierarchical hashing takes place, creating hashes of hashed transactions using hash functions.
3. The hashing goes on until we get a Root Hash or Merkle Root. 

A Merkle tree combines all transactions in a block and generates a digital fingerprint of the entire set of operations. It allows the network participant to verify whether the transaction got included in the block or not.

The Merkle root ensures that data blocks sent through a peer-to-peer network are secure, undamaged, and unaltered. Overall, it’s a method to confirm that all transactions in the Merkle tree got added and verified.

Also, Read: All about Ethereum

How is Merkle Tree useful in Blockchain?

Blockchain, as the name suggests, is a chain of blocks. Each block contains a set of data or components such as Block hash, previous block hash, nonce, difficulty, and many more in the block header. One of which is Merkle root.

Merkle root is a kind of summary of all the transactions in a block. We’ll see that in the data integrity of the Merkle tree. Using Merkle root, the network participants can verify the transactions have not been tampered with.

The below diagram can clarify the chain image in your head.

Bitcoin uses the Merkle tree method to keep transaction blocks integrated.

You have been reading the words verified and integrated a lot in the article above. Let’s under it with an example.

An example of Data Integrity using Merkle Tree

Now, coming to the Merkle tree encryption the information vs normal encryption of information.

What if 1 apple got bitten by someone. How will it affect the hashes?

How can you verify that the data chunk got corrupted?

With reference to the above example, we learned how cryptography works with the Merkle tree. It also makes sense to the hash integration. Even if the smallest alteration happened to the data, it heavily reflects on the final hash. However, mapping cryptography using a tree data structure helps in easy identification and verification.

Also Read: Solidity: A programming language for Smart Contracts

Benefits of Merkle Tree

Following are the benefits of using the Merkle tree:

• Help to validate the integrity of data or transactions.
• It consumes less disk space in comparison to any other hash tree.
• It can be divided and sub-divided to verify the information.
• Provides an efficient and faster way to arrange the data.

Use cases of Merkle Tree

Following are the use cases of Merkle tree other than blockchain:

• Git, a version control project-handling software, uses Merkle tree for its repository structure for programmers worldwide.
• Merkle tree is used by the certification authority to create verifiable certificates.
• Interplanetary File System (IPFS) is an open-source, peer-to-peer distributed protocol that uses the Merkle tree for file structure. 
• Its used for data replication in No-SQL distributed databases like Amazon DynamoDB.

Final Word

The above article explains the Merkle tree and its working. It also explained how data gets verified in a Merkle tree structure. In addition, it goes through how bitcoin uses the Merkle tree along with its benefits and other use cases. 

Hope you enjoyed learning about the Merkle tree with us. Stay tuned to learn more about blockchain concepts.

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