Ralph Merkle conceived the concept of a new data structure known as the Merkle tree in the 1980s. The Merkle tree is a technique to verify data integrity more efficiently and in a decentralized way. It is helpful to know how data is stored and verified on a blockchain, as most crypto coins are powered by blockchain technology.
This article will explain the concept of Merkle trees and help you understand how this technique helps to verify blockchain data efficiently.
Merkle tree data structure
First, let us understand the fundamental components of a blockchain before diving into Merkle trees. Transactions are the most basic component of a blockchain network. Transactions have information on the movement of crypto coins from one user to the other. Transaction blocks are transactions bunched together. Each block is linked to the previous block, making up a blockchain.
A Merkle tree consists of hash functions, a string of random alphanumerics created from transaction data. It is nearly impossible to trace input from a hash function, as it requires enormous computing power to decrypt it. A hash function becomes a one-way function and is one of the many components of a block.
Each transaction block on the blockchain has a Merkle root. Blockchain data is split into a tree form, and each node in this structure is connected to the data root. Every block has the hashed signature of the previous block, connecting one block to the next.
What is a Merkle root?
A Merkle root is the root node for each blockchain block and contains the hashed information of all transactions in a blockchain block. The Merkle root provides single-point validation for all the transactions on a block. It is a vital component of the tree structure because of the condensed nature of storing data, speeding up the verification process.
How does a Merkle tree work?
A Merkle tree is used to split block data securely and to ensure the data is not tampered with or damaged. It would be very difficult to validate transactions without a Merkle tree because of the tremendous amount of data on the blockchain.
There are three types of nodes in a Merkle tree.
- Leaf-node has the hashed data of one transaction in a block
- Branches are intermediate nodes that bunch hashes of various transactions together
- The root node has the hash information for the entire transaction block
This data management type helps validate individual transactions without downloading the entire blockchain. A blockchain runs efficiently and securely using the Merkle tree.
You can see an example of a Merkle hash tree below.
The root node is H(ABCDEFGH). T(A), T(B), T(C), and so on are the leaf nodes, and the rest are intermediate nodes. The image below shows how the data is split for validation. As shown in H(A) and H(B), each transaction data is converted into a hash function. These hash functions attach to form H(AB), H(CD), and so on. Intermediate hashes are attached to form the block hash function.
Benefits of Merkle tree
- Reducing processing time: Block transactions are distributed among many validators. Each validator works on transactions simultaneously. This method is much more efficient compared to validating transactions sequentially.
- Less CPU bandwidth is required: The distributed style of data processing requires less computing power. The distributed nature of validation reduces the burden on each validator.
- Detects data tampering: Many users are curious if the Merkle tree increases security. As mentioned earlier, each hash function is unique to its input. A change in a single transaction gets reflected in the hash output, as each transaction input has a unique output. Also, each leaf stores the hash of a transaction and is connected to another leaf, so the change in value cascades to the root of the tree. This ability makes it a secure way to validate data.
Importance of Merkle trees
Merkle tree cryptography has proved to be a highly beneficial technique for the functioning of blockchains. The reasons listed below prove that the Merkle tree is integral to blockchains.
- The blockchain is more scalable, as the Merkle tree structure reduces the burden on individual nodes.
- Compared to the sequential approach, using the Merkle tree data structure is a faster way to validate transactions.
- The Merkle tree structure ensures the security of the blockchain network, as any manipulation is reflected in the root hash of a block.
- This structure also reduces power consumption at an individual level.
Merkle tree applications
The Merkle tree data structure has been widely accepted in the crypto and data management industry. The top applications of Merkle trees are listed below.
- Bitcoin: The Merkle tree is used in the block validation of the bitcoin blockchain network. The Merkle tree exists in each transaction block, as mentioned earlier.
- Bitcoin mining: Miners individually validate transactions and store them in the leaf of the Merkle tree data structure.
- Verification: The Merkle tree concept is also being applied in proof-of-reserves to ensure consistency in asset management.
- Hyperledger Fabric: The Merkle tree data structure is also being applied in the Hyperledger Fabric blockchain to hash the block data.
Conclusion
Merkel trees are one of the most efficient ways to manage data on a blockchain network. It has proven to be highly useful in the verification processes of cryptos. Every crypto enthusiast should be aware of this fundamental concept.
Read about all the latest news and events in crypto on ZebPay blogs.
FAQs on the Merkle tree
What does a Merkle tree do?
A Merkle tree is an efficient data management technique used primarily in blockchains. The data is split securely into several nodes in a Merkle tree. This data split enables validators to check individual transactions quickly.
Why is a Merkle tree used in blockchain?
As blockchains are decentralized, they require a data management system that can be authorized by the entire network and remain secure. These functions can be carried out by Merkle trees.
Does the Bitcoin blockchain use Merkle trees?
Yes, Merkle trees are extensively used in the Bitcoin blockchain. Validators can check individual transactions in parallel using Merkle trees. All the transactions are hashed in the Merkle root of the block.
What other uses does the Merkle tree have?
Proof-of-reserves also use Merkle trees. This technique is used to check whether assets invested by users are backed by real assets on exchanges.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.
