The term Merkle tree is named after a computer scientist of the same name. Meanwhile, Ralph Merkle, who also developed cryptographic hashes, introduced the concept of the Merkle tree in 1987 and wrote a paper titled Digital Signatures Based on Traditional Cryptographic Functions. In the general terminology of computer science applications, a Merkle tree is simply a data structure. Merkel trees are widely used in the field of cryptography as an efficient and secure way to encode blockchain data. Merkel trees can also be referred to as hash trees because they are hash-based data structures used in the fields of computer science and cryptography.


In BTC, the root is part of the block header to ensure that transactions are recorded in real time. Branches are nodes that contain the values of the following nodes as their "parents". Typically, in Merkle trees, these nodes never contain more than two nodes below them, which is why they are called binary hash trees. However, hash trees can have more than two nodes.

How Merkel Trees Work？

Probably the most typical use case for Merkel trees is the Bitcoin blockchain, which is typically used to make data validation faster and more efficient.

Whenever a set of data from the main set of transactions needs to be verified as correct, a Merkle tree eliminates the need to query the entire message file.

Essentially, a Merkle tree is created by running transactions one hash function at a time, then connecting each new transaction to the previous one and hashing it. The process continues until the entire block is hashed into one hash. The Merkle tree summarizes all transactions in a block and produces a virtual fingerprint of the entire collection. This allows users to verify the existence of a specific transaction in a block without having to download all the other unnecessary information in it.

Specifically, if you want to confirm that a specific transaction, such as a leaf, is contained in the block above it, you can simply ask the network for information about a specific node. It will confirm the information for you using three hashes that will help you verify the existence of the specific node.

Importance of Merkel Tree

Merkle tree is an invaluable data validation tool in blockchain and computer science for the following reasons.

Speed

Let's say you need to verify the existence of specific data on the blockchain. Without Merkle trees, you would have to download the entire blockchain and sift through it. Obviously, this would take a lot more extra time, as the amount of data on the blockchain is usually very large, up to hundreds of gigabytes. For example, as of April 2023, Bitcoin has a whopping 388 gigabytes of data, according to a Statista report. However, with the help of Merkle Tree, you can easily track and query specific transactions and look up relevant information in less time.

Efficiency

Similarly, without Merkle Tree, you would have to look up all the transaction data to verify a single transaction, which is obviously laborious and cumbersome. With Merkle trees, the amount of data required to validate a transaction is significantly reduced to just four hashes; people can easily determine what they need to know about a particular transaction.

Trust

Finally, it is much easier to verify the integrity of a particular transaction using a hash tree. If you need to confirm a value from an untrusted source, simply reconstruct the part of the information that is relevant to you and compare it to the root hash from a trusted source. This is extremely significant in speeding up the verification process.


The Merkel Tree approach enables the storage of each user's account asset hash in the leaf nodes of the Merkel Tree. Everyone can verify that their funds are included in the Merkel Tree of assets by auditing the total amount of user assets stored in the leaf nodes of the Merkel Tree through a third-party organization with auditing credentials.

The invention of the Merkel Tree and its subsequent use in blockchain technology is a valuable asset for the technology sector. With it, one can now easily and efficiently speed up the process of verifying transactions on the blockchain without the need for additional time and space to download the entire blockchain. The Merkel Tree also effectively saves the time required for the verification process while making blockchain technology more secure.