Diagram of a Merkle Tree with a white background.
How It WorksMerkle Trees
December 10th, 2020

Overview of Merkle Trees

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.

Demonstration of a hash function as a one-way encryption of a key through a function with a resultant hash

Merkle Tree: Example of Hashing Transactions

Merkle Tree

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.