What is Merkle tree

In a cryptocurrency blockchain, a Merkle tree is used to arrange data in a more efficient way. The Merkle tree is also sometimes called a hash tree. Every time a transaction occurs, a new hash is created. This newly created hash is added to another hash value, and the pair is hashed again. This happens several times until a single hash is obtained called the Merkle root.

The Merkle root summarizes all the transactions within a block. In this way, to verify a transaction in a blockchain, a user would need the Merkle root and some other hashes in the tree. The user would not have to verify the entire blockchain. This allows to reduce the amount of computing power consumed on authentication.