Blockchain
A Beginner’s Guide to Merkel Trees in Blockchain
Merkle trees ensure data integrity, efficiency, and scalability within blockchain networks, making them an essential part of this fast-growing technology.
Merkle trees, staples of the computer science ecosystem, have found usage in the cryptocurrency space. Interest in them has recently increased within the crypto sector as a result of the FTX debacle.
This article is an in-depth exploration of Merkle trees in blockchain, explaining what they are, how they work, and their applications in the industry.
What Are Merkle Trees?
A Merkle tree, also a hash tree or a binary hash tree, is a data format with applications in computer science and cryptography.
At its core is the hierarchical layout of data blocks defined by a cryptographic hash. This layered arrangement of data blocks gives it a tree-like appearance.
The concept of Merkle trees is the brainchild of Ralph Merkle, who patented it in 1979, thus its name. They are crucial in safeguarding data purity and security in sectors dealing with large datasets like blockchain.
The Structure of Merkle Trees in Blockchain
To better understand the structure of Merkle trees in blockchain, imagine an upturned tree with three primary levels. At the top is the Merkle root, the non-leaf nodes occupy the middle part, and the leaf nodes are at the bottom.
The leaf nodes are the building blocks of the Merkle tree. They are the hashes of every transaction occurring in a given block. You may know them better as transaction IDs (TXIDs) that are viewable via a block explorer.
Non-leaf nodes, forming the second level of a Merkle tree, are bundles of paired leaf node hashes. They derive their name from the fact that they don’t contain TXIDs. Instead, they only store the transaction hashes of the two leaf nodes making them.
Finally, at the tree’s topmost non-leaf node is the Merkle root. It is a single hash representing all the block’s transactions hashes. The Merkle root is the block’s exclusive identifier and is crucial in verifying its authenticity.
How Do Merkle Trees in Blockchain Work?
Here is how Merkle trees in blockchain work:
Step 1: Transaction Hashing
A cryptographic hash function, say SHA-256, hashes all the transactions in the block. This process produces a unique identity (hash) for each, making that data incorruptible.
Step 2: Pairing the Hashes
The same function pairs and hashes two transaction hashes to create a new one. This pairing and hashing repeats at each level, with each child node forming a new parent node.
Step 3: Formation of the Merkle Root
The last two parent (non-leaf) nodes pair up to form a single hash, the Merkle root. This is the entire block’s cryptographic fingerprint and headlines it.
Step 4: Verifying a Block’s Integrity
You can verify the integrity of a given transaction by obtaining its corresponding hash from the Merkle root. Starting there and following the parent nodes, you can recreate the Merkle root. If the two match, then the transactions in the block are authentic.
Let’s consider a simple example with four transactions, A, B, C, and D, occurring in a given block:
Hashing Transactions: Each transaction is hashed:
hashA = hash(A)
hashB = hash(B)
hashC = hash(C)
hashD = hash(D)
Pairing and Hashing: The hashes are paired and hashed together:
hashAB = hash(hashA + hashB)
hashCD = hash(hashC + hashD)
Creating the Merkle Root: The resulting hashes are hashed together to create the Merkle root:
MerkleRoot = hash(hashAB + hashCD)
Merkle Trees as Proof-of-Reserve
Proof-of-Reserve (PoR) is a bookkeeping practice centralized exchanges (CEXs) and other crypto custodians use to prove their financial health. It’s an open report of the company’s crypto holdings. Calls for PoR audits have grown with the increase in crypto-related fraud cases.
Given that CEXs hold large sums of crypto, Merkle trees are a convenient way of proving their reserves. Here is how they help them achieve that:
Gathering user balances: The CEX or custodian compiles a list of all users and their balances.
Hashing user balances: It then uses a cryptographic function to hash each user’s holdings.
Constructing the Merkle tree: The CEX arranges the hashed user balances in a hierarchical structure. It then hashes these in pairs, forming a Merkle root.
Publishing the Merkle root: The next step is sharing the Merkle root publicly. This activity enables users to verify their balances without revealing the entire list of their credits.
Verification: Users can verify their balances by obtaining their Merkle proofs, which are paths from their balance hashes to the Merkle root.
Why Are Merkle Trees Important for Blockchains?
Merkle trees ensure data integrity, efficiency, and scalability within blockchain networks. By hashing individual transactions and combining them into a Merkle root, they create a tamper-proof identifier for each block. So, any correction to a transaction alters the Merkle root, alerting the network of potential tampering.
Moreover, they help in achieving verification efficiency. Users can quickly check a transaction’s probity by comparing its hashes with those in the Merkle tree. Furthermore, they don’t need to download and compare entire blocks.
They also contribute to a blockchain’s scalability by reducing data transmission and verification requirements. This way, they help improve the network’s performance. Besides, they minimize storage needs by storing only the Merkle root and relevant transaction hashes. Thus, they benefit nodes with limited storage capacity.
Source: unchainedcrypto.com
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Blockchain
Sui’s Path Forward: Bybit Web3 and Sui Foundation to Host Exclusive Debate Live at Taipei Blockchain Week
Bybit Web3
Blockchain
Oxbridge / SurancePlus Announces Upcoming Participation in Key Industry Events
Blockchain
Prosper Powers Bitcoin MENA 2024 as Official Hashrate Sponsor
Prosper, the leading decentralized protocol offering institutional-grade Bitcoin mining power on-chain, proudly announces its role as the official Hashrate Sponsor for Bitcoin MENA 2024. The highly anticipated conference will take place on December 9-10, 2024, at the iconic Abu Dhabi National Exhibition Centre (ADNEC), bringing together industry experts and key players from the global Bitcoin ecosystem and the wider crypto industry.
As the official Hashrate Sponsor, Prosper will feature prominently at the event and host an interactive booth where attendees can engage directly with its team and explore how Prosper is setting the standard for institutional-grade Bitcoin mining power on-chain, further unlocking Bitcoin’s full potential as the most decentralized cryptocurrency.
“As one of the most innovative community-focused projects under Animoca Brands, we are excited to showcase our unique offering at this year’s Bitcoin MENA event which aligns perfectly with our mission to democratize access to Bitcoin and its mining power,” said Milton Lam, Advisory Council Member & Launch Partner, Prosper. “Our participation underscores our leadership in institutional-grade Bitcoin mining innovation, advancing the possibilities of the world’s original and most decentralized cryptocurrency.”
Bitcoin MENA 2024 will bring together global leaders and influential voices, including Eric Trump, Prince Filip of Serbia and Saifedean Ammous, to shape the conversation on Bitcoin’s future.
Eric Trump, Executive Vice President of the Trump Organization, will deliver a keynote address at Bitcoin MENA 2024, marking a significant milestone for the event. His participation brings a wealth of business acumen and leadership experience to discussions on Bitcoin’s growing adoption in the Middle East. Following Donald J. Trump’s appearance at Bitcoin 2024 in Nashville this July, the Trump family’s growing support for Bitcoin as a solution to combat inflation in the U.S. underscores the event’s importance.
Other notable attendees include Prince Filip of Serbia, Saifedean Ammous, author of The Bitcoin Standard and Abdulla Al Dhaheri of the Blockchain Centre Abu Dhabi. Their involvement highlights Bitcoin MENA’s influence and Abu Dhabi’s emerging role as a central hub in the global Bitcoin economy.
The Abu Dhabi edition of the Bitcoin Conference promises to be a transformative event, uniting institutional investors, developers, influencers and enthusiasts to explore Bitcoin’s rapidly growing potential in the region and globally.
The post Prosper Powers Bitcoin MENA 2024 as Official Hashrate Sponsor appeared first on News, Events, Advertising Options.
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