What Is a Merkle Root (Cryptocurrency)? How It Works in Blockchain
What Is a Merkle Root?
A Merkle root is the result of hashing the transactions in a block, pairing those hashes, and hashing them again until a single hash remains. Some blockchains use it to verify transactions without hashing and pairing hashes to compare Merkle roots generated by other nodes. This technique reduces the time needed to verify the transactions included in a block.
A Merkle root is a simple mathematical way to verify the data on a Merkle tree.
Merkle roots are used in cryptocurrency to make sure data blocks passed between peers on a peer-to-peer network are whole, undamaged, and unaltered.
Merkle roots are central to the computation required to maintain blockchains like Bitcoin and Ethereum.
Understanding a Merkle Root
A blockchain is composed of various blocks that are linked with one another (hence the name blockchain). A hash tree, or the Merkle tree, encodes the transaction data in an efficient and secure manner. It enables the quick verification of blockchain data, as well as the quick movement of large amounts of data from one computer node to the other on a peer-to-peer blockchain network.
Every transaction occurring on the blockchain network is hashed. However, these hashes are not stored in sequential order on the block but in the form of an upside-down tree structure such that each hash is hashed with another hash until all hashes have been turned into one hash.
This one remaining hash is called the Merkle root.
For example, consider the four-transaction block in the image below. At the lowest level, there are four transaction hashes. One level above the lowest leaf level, two transaction hashes are hashed to create one. There are two hashes remaining, and these are hashed into the final hash, the Merkle root.