✅ What is a Merkle Tree? 2023

A Merkle Tree is a foundation on which blockchain technology is based on. It is a technical concept and can be a little difficult to understand. Crytposwede has prepared this beginner’s introduction to the Merkle Tree and the role it plays in the processing of blockchain transactions. While no means comprehensive, this introduction is meant to give you some basic information that will jump start your own research.

About Merkle Trees

The first thing to understand is that a Merkle Tree helps to underpin the functions of a blockchain. It is a necessary component for blockchains to work. What the component does is help with the verification and management of very large blocks of data. Where blockchains are concerned, there is a possibility of endless blocks or sets of data. A Merkle Tree helps to maintain efficiency and secure verification of all that data.

You might be surprised to discover that Merkle Trees are not new, and they are not exclusive to Bitcoin or the blockchain. They were invented in 1979 by a man named Ralph Merkle. They are essentially a “tree” of data structures. Each non-leaf node in the Merkle Tree is a hash of its respective child nodes. Sound confusing? Probably so. Here is a picture of a Merkle Tree structure that might help to clarify the concept:

This image comes from Wikipedia and it represents a binary hash tree. You will notice that the branches on the left side of the tree are hashes of their respective L1 and L2 children at the bottom. The branches on the right are hashes of the L3 and L4 children. This is the most simple example of a Merkle Tree, but some of you are probably saying it doesn’t look so simple. So, let’s try to clarify it in terms of the present discussion with a single sentence:

Merkle Trees are a way of structuring large amounts of data in the form of hashes and represent that data with a single hash. Now, the picture should be more clear, but we need to see how this applies to the blockchain.

How Merkle Trees are Used With Bitcoin and the Blockchain

Bitcoin creates cryptographic hashes on the blockchain with the SHA-256 algorithm. These hashes are capped at 256 bits in length. Hashes are what provide the security of Bitcoin and the blockchain. A block on the blockchain is a record of transactions or other data. Hashes are used to connect one block to another, and they appear in the header for the block. What this does is create one uninterrupted flow of data – a chain – from one block to the next. Therefore, a permanent record is created and stored on the blockchain.

Merkle Trees are a necessary component when it comes to mapping transactions on the blockchain and maintaining the integrity of the architecture. Without the use of a Merkle Tree it would be impossible to sustain the blockchain over a long period of time. Merkle Trees also assist in the pruning of unnecessary data that is created as blocks are processed. This helps to reduce the data on the blockchain to its bare minimum.

Other cryptocurrency blockchains also use Merkle Trees. Ethereum is one such example. There is a difference in the Ethereum Merkle Tree, however. It is called a Patricia and is much more complex because it contains three separate trees.

Do You Need to Know About Merkle Trees to Use Bitcoin?

It is not necessary for you to understand all of the complexities of Merkle Trees in order to use Bitcoin. Merkle Trees are merely something that is working in the background to keep the blockchain running smoothly. Many Bitcoin investors will never know how a Merkle Tree works or even what it is.

But, if you are the kind of person that really likes to know how something works then this is a good starting point. As you delve deeper into Merkle Trees and what they mean to the blockchain, you are also going to need to become familiar with things like nodes and how Bitcoin transactions are processed. Take it slow and soon you will be a Merkle Tree expert.