Merkle Tree in Blockchain: What is it and How does it work | Simplilearn

A hash tree, also known as a Merkle tree, is a tree in which each leaf node is labeled with the cryptographic hash of a data block, and each non-leaf node is labeled with the cryptographic hash of its child nodes’ labels. The majority of hash tree implementations are binary (each node has two child nodes), but they can also have many more child nodes.

But what actually is the Merkle tree in Blockchain, and how it is used in Blockchain? So, if you want to know the answer to all these questions, then you are in the right place.

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What Is a Merkle Tree?

• Merkle trees, also known as Binary hash trees, are a prevalent sort of data structure in computer science.
• In bitcoin and other cryptocurrencies, they’re used to encrypt blockchain data more efficiently and securely.
• It’s a mathematical data structure made up of hashes of various data blocks that summarize all the transactions in a block.
• It also enables quick and secure content verification across big datasets and verifies the consistency and content of the data.

What Is a Merkle Root?

• A Merkle root is a simple mathematical method for confirming the facts on a Merkle tree.
• They’re used in cryptocurrency to ensure that data blocks sent through a peer-to-peer network are whole, undamaged, and unaltered.
• They play a very crucial role in the computation required to keep cryptocurrencies like bitcoin and ether running.

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Cryptographic Hash Functions

• A hash function maps any type of arbitrary data of any length to a fixed-size output. It is commonly used in cryptography since it is a cryptographic function.
• They are efficient and are well-known for one property: they are irreversible. It’s a one-way function that’s only meant to work in one direction.
• Some of the Hash families available are Message Direct (MD), Secure Hash Function (SHF), and RIPE Message Direct (RIPEMD).

Now, take an example, if you use the SHA256 hash algorithm and pass 101Blockchains as input, you will get the following output

fbffd63a60374a31aa9811cbc80b577e23925a5874e86a17f712bab874f33ac9

In conclusion, these are the following key properties of the hash function:

• Deterministic
• Pre-Image Resistant
• Computationally Efficient
• Cannot be Reversed Engineered
• Collision Resistant

Working of Merkle Trees

A Merkle tree totals all transactions in a block and generates a digital fingerprint of the entire set of operations, allowing the user to verify whether it includes a transaction in the block.

• Merkle trees are made by hashing pairs of nodes repeatedly until only one hash remains; this hash is known as the Merkle Root or the Root Hash.
• They’re built from the bottom, using Transaction IDs, which are hashes of individual transactions. 
• Each non-leaf node is a hash of its previous hash, and every leaf node is a hash of transactional data.

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Now, look at a little example of a Merkle Tree in Blockchain to help you understand the concept. 

Consider the following scenario: A, B, C, and D are four transactions, all executed on the same block. Each transaction is then hashed, leaving you with: 

• Hash A
• Hash B
• Hash C
• Hash D

The hashes are paired together, resulting in:

• Hash AB

and

• Hash CD

And therefore, your Merkle Root is formed by combining these two hashes: Hash ABCD.

In reality, a Merkle Tree is much more complicated (especially when each transaction ID is 64 characters long). Still, this example helps you have a good overview of how the algorithms work and why they are so effective.

Benefits of Merkle Tree in Blockchain

Merkle trees provide four significant advantages – 

• Validate the data’s integrity: It can be used to validate the data’s integrity effectively.
• Takes little disk space: Compared to other data structures, the Merkle tree takes up very little disk space.
• Tiny information across networks: Merkle trees can be broken down into small pieces of data for verification.
• Efficient Verification: The data format is efficient, and verifying the data’s integrity takes only a few moments.

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Why Is It Essential to Blockchain?

Think of a blockchain without Merkle Trees to get a sense of how vital they are for blockchain technology. Let’s have one of Bitcoin because its use of Merkle Trees is essential for the cryptocurrency and easier to grasp.

• If Bitcoin didn’t include Merkle Trees, per se, every node on the network would have to retain a complete copy of every single Bitcoin transaction ever made. One can imagine how much information that would be.
• Any authentication request on Bitcoin would require an enormous amount of data to be transferred over the network: therefore, you’ll need to validate the data on your own. 
• To confirm that there were no modifications, a computer used for validation would need a lot of computing power to compare ledgers.

Merkle Trees are a solution to this issue. They hash records in accounting, thereby separating the proof of data from the data itself. 

• Proving that giving tiny amounts of information across the network is all that is required for a transaction to be valid.
• Furthermore, it enables you to demonstrate that both ledger variations are identical in terms of nominal computer power and network bandwidth.

Use-Cases of Merkle Tree in Blockchain

There are more Merkle tree implementations out there. 

• Git, a distributed version control system, is one of the most widely used. It is used to handle projects by programmers from all around the world.

• Interplanetary File System, a peer-to-peer distributed protocol, is another suitable implementation. It’s also open-source, allowing computers to join and use a centralized file system.

• It’s part of the technique that generates verifiable certificate transparency logs.

• Amazon DynamoDB and Apache Cassandra use it during the data replication process. These No-SQL distributed databases use Merkle trees to control discrepancies.

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Conclusion

Merkle Tree is an essential fundamental of Blockchain technology, enabling its growth in the IT World. Simplilearn’s Blockchain Certification Training was designed for developers who want to decipher the global craze surrounding Blockchain, Bitcoin, cryptocurrencies, and many other technologies like Merkle Tree. You’ll learn the core structure and technical mechanisms of Bitcoin, Ethereum, Hyperledger, Dogecoin, and Multichain Blockchain platforms and their underlying technologies. 

Hope you liked the tutorial on Merkle Tree in Blockchain, in case of any doubts, please ask your questions in the comment section below.