A Merkle tree refers to a data structure used in several computer science applications. In the context of cryptocurrencies such as Bitcoin, Merkel trees are used to encode blockchain data more efficiently and securely.
Understanding the term
A Merkle tree organizes and structures large amounts of data, so as to make it more straightforward when processing. For cryptocurrencies and blockchain technology in general, the Merkle tree can structure transaction data in a way that is less demanding on resources. For a crypto transaction made using a Merkle tree structure, it is first hashed and then given an equivalent hash value. After each transaction has been hashed, the hash values are paired with another hash value and then hashed again.
For example, the hash value AB and AC become ABC. This process of pairing hash values continues till a final hash value is produced, which is known as the Merkle root. This provides a summary of all the transactions it contains and is then finally inserted into the block header.
A Merkle tree is useful for verifying a specific transaction without downloading the whole blockchain. A change to a transaction in the Merkle tree will lead to an entirely different corresponding Merkel root, making it easy to check whether data has been tampered with in any way.