Blockchain Merkle Trees

Merkle Trees are foundation components of the blockchain mechanism. The methodical, systematic, and reliable verification of content in unbounded and dispersed data sets is enabled with the use of Merkle Trees. Blockchain implementations such as Bitcoin and Ethereum use Merkle Trees as essentials. Merkle Trees help in validating the stability and essence of data. It provides a hashed structure, which not only protects data cryptographically but also maintains its integrity.

History of Merkle Trees

The concept of Merkle Trees came into existence in the year 1979. A student at Standford University named Ralph Merkle wrote a paper labeled “A Certified Digital Signature,” which proved to be a major breakthrough to initiate the development of blockchain. The paper discussed new methodologies for creating proofs. The process of verifying data much faster than existing methods made Merkle’s paper a success. The pattern of encrypting computer protocol functions radically changed after the introduction of Merkle Trees. Since then, the popularity and use of Merkle Trees have grown tremendously.   

Working of Merkle Trees

Each block in a blockchain network has thousands of transactions stored in it, along with a transaction ID for its authentication. Thus, a considerable amount of the space and time is required to manage and process these transactions. Employing the least amount of data in verifying and processing these transactions is preferable. This is what exactly Merkle Trees do.

  • Merkle Tree collects every transaction in a block and creates a digital fingerprint of the complete set of operations. This fingerprint is a 64 character code labeled as Merkle Root.  It permits a user to substantiate the inclusion of a transaction in a block.
  • The process of the generation of Merkle Roots takes place in pairs. For 600 transaction IDs, grouping into 300 pairs will be done.
  •  Repetitive hashing of each pair of nodes is done until there is only one hash left, called the Root Hash (or the Merkle Root). Bottom up approach is followed for the construction of Root, starting from hashing singular transaction IDs.
  • There are two kinds of nodes in a Merkle Tree-
  • Leaf node– Contains hash of Transactional data
  • Non-Leaf node– Contains hash or previous hashes
  • The Merkle Tree is binary in nature and thus requires an even number of leaf nodes. In the case of an odd number of nodes, the hash of the last node is copied, and one extra node is created for uniformity.

Example of Merkle Tree

  1. In the example given below, there are four transactions, labeled P, Q, R, and S. Each Transaction has an associated transaction ID, which is hashed, and each hash is stored in an individual leaf node.
Blockchain Merkle Trees
  • The nodes are grouped successively in pairs and then hashed, the hash is stored in the parent node. For the given example, the nodes containing hash (P) and hash (Q) are paired, and the combined hash value i.e., hash (PQ), is stored in the parent node. Similarly, hash (RS) is stored in the other parent node. The same process is repeated for all pairs of successive nodes.
  • For the final step, the parent nodes are summarized, the nodes containing hash (PQ) and hash (RS) are combined and hashed. This hashed value, hash (PQRS), is stored in the Merkle Root.

Advantages of Using Merkle Tree           

  • It provides integrity and authentication at the most fundamental level.
  • It consumes comparatively very limited data storage for the process of proofing.
  • Little information needs to be transmitted over the unbounded network to carry out the process of substantiation and management.
  • Merkle Trees help advocate that later versions of a log include everything from an earlier version.

Applications of Merkle Trees

  1. Merkle Trees are used by Certification Authorities as a means of certificate transparency. Both public and private key pairs are considered as Merkle Tree leaves. This strategy is opted to avoid rejection if any one of the CA might turn out to be a defaulter and certify a domain without bringing it to the knowledge of the domain’s owner.
  • The Root of the Merkle Tree is treated like a public key, and the discrete nodes are used as one-time signatures. The advanced and revised updates of this are robust against quantum attacks.
  • Simplified Payment Verification (SPV) is a technique of authentication, which is used when a specific transaction is included in a block without completely downloading it. Merkle trees are used thoroughly by SPV nodes.
  • These are used as building blocks of data structure by Ethereum and Bitcoin.

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