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Merkle Tree

A Merkle Tree is a data structure designed to build a hash of many separate pieces of data and allowing efficient recalculation of the hash when items are added, removed, or changed.

The transactions in a Block are built into a Merkle Tree. The root of this tree, or Merkle Root, is a hash representing a compound, indirect hash of all of the items added to the Merkle Tree (i.e. transactions) and is included in the [Block Header](, ensuring the block hash is dependent (indirectly) on all of the transactions that are included in the block.

Using a Merkle Tree to manage hashing the transactions in a block enables efficient addition of newly submitted Transactions to a block being mined. Rather than re-hashing the entirety of the data of the Transactions to be included in the block, the new Transaction can be hashed and then a small number of hashes can be recalculated, leading up to the Merkle Root. For large blocks this can heavily reduce the amount of data to be (re-)hashed.

Using Merkle Trees also allows for transferring only a subset of a block while still providing confidence that the data provided in fact appeared in the block in question.

For more information, see Merkle Block.