Merkle Tree and Merkle Root in Blockchain

The blockchain is a decentralized ledger for recording data. It is the technology behind cryptocurrencies. Unlike a manual ledger, the blockchain is immutable, any record on the blockchain is final and can’t be corrupted. Amongst the features contributing to the uniqueness of blockchain are the merkle tree and merkle root.

Merkle tree is an integral part of the blockchain. It helps to effectively verify transactions and maintain the integrity of information stored on the blockchain. In a decentralized network like Bitcoin, where everyone has a copy of the network data, there is a need to verify that such data is valid to ensure consistency. Let’s take a look at how the merkle tree and merkle root are applicable in the blockchain.

What Is a Merkle Tree?

A merkle tree is a structure used to effectively and efficiently verify and maintain data integrity in a set. It consists of multiple transaction hashes arranged in a tree-like structure. Hash functions are used in blockchain to represent transaction detail simply and consistently. In other words, hashing is taking an input of any length and returning an output of a fixed length. The use of hash functions to represent information facilitates the efficient handling of large amounts of information.

The Merkle tree was developed in 1980 by a Stanford professor, Ralph Merkle. He presented the technology in his paper on digital signatures titled “A certified digital signature”. Merkle trees are mostly used in peer-to-peer networks (P2P) where information is shared and independently validated. The merkle tree is widely used in cryptocurrencies such as Bitcoin to verify the validity of transactions.

The blockchain as the name implies is made up of blocks linked together. Each block is capable of hosting thousands of transactional data. Verifying transactions on the network will require lots of space and processing power. But with the aid of a merkle tree, transactions can be verified without necessarily going through thousands of transactions on the network.

The transactions are grouped in pairs and the hash of each pair is found and stored in the parent node. The parent nodes are also paired and their hash is found and stored one level up. The trend continues till we get to the root of the hash tree. In summary, there are three types of nodes on the merkle tree.

1. Leaf node: Every single transaction in a block has its hash value. This hash value is stored on the leaf node.

2. Non-leaf node: This node is made up of hash values from different leaf nodes. It is the intermediary between the leaf node and the root node.

3. Root node: This is the root of the merkle tree and contains a single hash representing all the transactions in a block which is stored in the block header.

With the above structure, verification will only require checking the block header rather than the entire system. The merkle tree is said to be binary. This means for the proper construction of the merkle tree, the number of leaf nodes ought to be even. But in a situation where we have an odd number of leaf nodes, the last one is duplicated to make it even.

What Is a Merkle Root?

The merkle root is the hash of all the hashes of transactions in the merkle tree. When the transactions have been successfully paired and hashed, the result is the merkle root. A change in any data will lead to a change in the merkle root. So the merkle root ensures that no data on the network is altered.

How Does a Merkle Tree Work?

The merkle tree breaks bulk data into smaller units that can easily be handled. It combines all transactional data in a block to produce a single digital fingerprint. Hence verifying transactions becomes easier and faster.

Merkle tree is formed by combining and hashing different pairs of nodes. The result is the merkle root. The structure of a merkle tree runs from the bottom up (root to leafs). Different transactions from the leaf nodes are paired to form the non-leaf nodes till we get to the root node.

To have a clearer understanding of a merkle tree, consider a block with 8 different transactions, T1, T2, T3, T4, T5, T6, T7, and T8. Each transaction is hashed to produce H1, H2, H3, H4, H5, H6, H7, and H8. The hashes are then paired and hashed again to give H(12), H(34), H(56), and (H78). The result is paired once again and hashed to give H(1234) and H(5678). A step further will yield H(12345678) as the merkle root. The diagram below represents a merkle tree constructed from 8 different transactions in a block.

The above explanation gives you an insight into the concept of a merkle tree, though it is more complicated than what we have. The merkle root generated in the end is stored in the block header and used during the mining process. For example in the Bitcoin network, the block header is hashed rather than dealing with separate transactions. With the merkle root present in the block header, any change in the initial data will be easily detected. This makes the whole system tamper-proof.

Advantages of Merkle Tree

Using the merkle tree and merkle roots in the blockchain offers so many advantages. Prominent among them are:

Efficient Data Verification Process

Merkle tree provides an efficient means of verifying transactions without consuming much processing power.

Less Memory Capacity

Verifying transactions using a merkle tree does not require downloading the whole blockchain. Hence computation requires lesser space compared to other data structures.

Fast Transactions

As transactions are paired and a single hash is produced, the transfer of information across the network becomes faster. That is one of the major reasons the transfer of cryptocurrencies is very fast.

Tampering Detection

The merkle tree makes it possible to detect when a transaction has been tampered with. When a transaction is hashed and stored on the blockchain, a change in the initial information will also cause a change in the hash. This can be detected by comparing the current hash with the hash stored in the block header.

Why are Merkle Trees and Merkle Roots Essential in Blockchain?

Blockchain consists of chains of blocks. A single block can hold up to thousands of different transactions. The root hash obtained at the end of the merkle tree sums up all the transactions contained in that block. This makes the verification process efficient and any alteration will easily be detected.

In a situation where the merkle tree is not used, every node on the network will have its copy of the ledger. Validating transactions in such a system will require going through all the copies of the node and comparing them. Comparing different versions of the ledger will require lots of computing power and memory space. But with the help of a merkle tree, this process is bypassed and verification is made possible using minimal computation power.

Applications of Merkle Trees and Merkle Roots in Blockchain

Merkle trees and merkle roots are very important in the blockchain. In the Bitcoin network and other cryptocurrencies, they are essential in the mining and verification process.

Mining

The merkle tree is an integral part of the Bitcoin network. To verify transactions and add new blocks, miners on the network are tasked with hashing data to generate an output that adheres to specific conditions. This can cost trillions of attempts before finding a valid output. To do this, the miners keep guessing random numbers to get an output.

The mining process is made easier and more efficient using the root hash. All that is needed is to construct a proper merkle tree using the different transactions. Then place the root hash in the block header. So during mining, you only need to hash the block header rather than the entire block.

Verification

When running a node on a device with limited processing power. It will be impossible to download and hash all the transactions in a block. What is needed here is a merkle proof ( a proof that a particular transaction is present in a block). This reduces the number of hashing to be done hence transactions can be verified using the device.

Conclusion

Merkle trees and merkle roots are designed to enhance the verification of data in the blockchain. These tools help ensure the validity of transactions without the need to download the entire network. They are the brain behind mobile wallets today. Users can interact with the blockchain without the need to have an entire copy of the ledger.