A Merkle tree, also known as a hash tree, is a way to organize and summarize a large amount of data using cryptographic hashes. It's a hierarchical, tree-like structure where:
Leaves (at the bottom): Each leaf node at the bottom of the tree is the cryptographic hash of a piece of data. In the case of a blockchain, this data is usually a single transaction.
Branches (in the middle): Each "branch" or intermediate node is created by hashing the combination of its two child nodes. For example, if you have two transaction hashes, you combine them and then hash the result to create a new, single hash.
Merkle Root (at the top): This process is repeated all the way up the tree until a single hash is left at the very top. This is the Merkle Root. It is a single, concise digital fingerprint of all the data (all the transactions) that were hashed to create it.
Why are Merkle Trees so important in crypto?
Merkle trees provide two crucial benefits for a blockchain:
Efficiency: They allow for quick and easy verification of data without needing to download the entire dataset. In Bitcoin, a block can contain thousands of transactions. Without a Merkle tree, a user would have to download and verify every single one of those transactions to confirm that just one of their own transactions was included in the block.
