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What is a Merkle tree?
A Merkle tree is a way of summarising many pieces of data, such as all the transactions in a block, into one short hash called the Merkle root. Hashes are paired and hashed together, level by level, so changing any single item changes the root.
What it means for you
A light wallet can confirm that a payment is in a block from a handful of hashes instead of the whole block, but it still depends on the block headers it receives being the real chain. Reserve reports built on Merkle trees can prove your balance was included; they cannot prove every debt was counted.
How it works
In Bitcoin, transaction IDs are paired and hashed with SHA256(SHA256()), then the results are paired and hashed again until one hash remains: the Merkle root, stored in the 80-byte block header. A hash without a partner is hashed with a copy of itself. To prove one transaction is included, a node supplies the intermediate hashes on its path to the root; the developer guide's example proves one transaction in a five-transaction block with three hashes plus the header. Ethereum uses a related structure, the Merkle Patricia trie, whose state root changes if any stored value changes.
An example
Say a block holds 1,024 transactions. The tree has 10 levels above them, so proving one transaction is included takes 10 partner hashes of 32 bytes each, about 320 bytes, plus the block header, instead of downloading every transaction in the block.
Sources: Bitcoin developer guide: block chain, Bitcoin developer reference: block chain, ethereum.org: Merkle Patricia Trie · checked 4 October 2026
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