Blockchains use cryptographic encryption using hash functions, which you may be familiar with. The Merkle Tree is the structure these hashes produce, and it has applications outside of blockchains. Ralph Merkle was the first to discuss the structure in that hashes are produced. He gave his name to this structure and had it copyrighted in 1979. It was called the Merkle Tree.
This idea, which is now a hot topic, was made possible by Satoshi Nakomoto‘s usage of the Merkle Tree to establish the Bitcoin consensus.
How Does Merkle Tree Work?
When more than one piece of data has a single hash function, the Merkle Tree is produced by constantly fetching binary hash functions. The initial hash results are referred to as leaves. The leaf develops, gets hashed, and then continues to ascend upward.
As hash functions cannot be reversed, this upward system can only operate in one direction. The Merkle root is the highest point. The Merkle Tree is created by hashing all data up to the Merkle root.
The Merkle root will be totally altered by even the smallest alteration to the transaction data. This problem is brought on by the hash functions algorithm. Data is hashed using the SHA-256 method by Bitcoin. This technique generated a 64-character password that cannot be repeated, and theoretically, it cannot be broken even by malevolent actors using a quantum computer.
Merkle Tree is Still a Viable Technology
Many started to fear centralized cryptocurrency exchanges after hearing of FTX‘s collapse, which sent shockwaves across the cryptocurrency community. The concept of Proof of Reserve, which would give transparency regarding the assets controlled by the exchanges, is really based on Merkle Tree technology.
With Satoshi Nakamoto‘s preference for the Bitcoin data model, Merkle Tree, which first appeared in the literature in 1979, enjoyed a golden period and is still utilized and is believed to be used to address several significant problems.
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