Merkle (Hash) Trees: Explained

Merkle trees make extensive use of one way hashing and are established by hashing a hash’s corresponding hash together and climbing up the tree until you obtain the root hash which is or can be publicly known.

Technical Note: Demonstrating that a leaf node is a part of a given binary hash tree requires computing a number of hashes proportional to the log of the number of leaf nodes in the tree.

Merkle Tree: Example of Hashing Transactions

In the Merkle Tree above, each block-level represents a higher order of hashing stemming from a transaction (T0-T7). For each block-level above the original transaction, the subsequent hash value (H), is passed through a hash function until reaching the highest block-level represented as the combination of all the preceding hashes (H01234567).

The lowest-level hash values are referred to as leaves — containing the hashed value of the transaction (T) associated with the leaf. The resultant hashing of leaves and their subsequent hashes, levels 3 and 4, are referred to as branches (or nodes). Finally, the highest block-level, the Merkle Root, stores the summary of all of the transaction data as a singular value.