MERKLE TREES AND ROOTS OF TRUST

If it wasn’t for Ralph Merkle and the seminal cryptography work he did in the 70s, Bitcoin may have never happened. At the very least, its development would have been significantly weaker and less efficient. Bitcoin’s blockchain traces back to the seed that Ralph Merkle planted three decades earlier – a seed that rapidly grew into a tree. A Merkle tree of course.

In the late 70s, as computing was getting up to speed, there was a desperate need for cryptographic schemes that could support data verification. And so, while Apple was developing its first home computer, academics were in the lab drawing chalkboard equations in a bid to identify an efficient means of verifying and summarising large sets of data.

After much burning of the midnight oil, Ralph Merkle found a solution that was not merely efficient – it was tamper-proof. Unlike other schemes being developed around the same time, his model – which eventually took his name – was designed to detect modifications.

It was a major breakthrough whose full implications could scarcely have been imagined at the time.

The Cryptographic Tree of Life

A Merkle tree is a way to organise and verify large amounts of data efficiently. Think of it as a family tree, but instead of people, it’s built with data. Each chunk of data, known as a leaf node, is given a unique “fingerprint” called a hash: essentially a short code that represents the data. Pairs of these hashes are combined and hashed again to create a new hash for a “parent” node. This process repeats, combining pairs of hashes into new parent hashes, forming a tree-like structure.

A Merkle tree is efficient because you only need a small amount of data – the root plus a few hashes – to verify a specific transaction, instead of checking the entire dataset.

Think of it like your family tree, growing from the oldest ancestor and linking all the way to your modern-day family. Now imagine if something happened way back in time to change the destiny of your ancient ancestor – they married a different spouse, say. That event would change the composition of the entire family line right down to the present day. That’s essentially what Ralph Merkle invented: a means of proving who your ancestor married, without the need to check back through every descendant in the centuries in between.

Ralph Merkle’s invention was groundbreaking, but like so many innovations, its magnitude wasn’t fully appreciated at the time. His work on hash-based signatures and Merkle trees, undertaken in 1979, was initially circulated in his PhD thesis and patent, but it wasn’t published in a major conference until almost a decade later when it surfaced at CRYPTO ‘87. This was no cryptocurrency conference, of course: it was an academic event dedicated to “Theory and Applications of Cryptographic Techniques on Advances in Cryptology.”

By the mid ‘90s, Merkle trees had moved from idea to implementation, with one company (Surety) hashing client documents into a Merkle tree and publishing the root in the New York Times classified section each week. Years later, when Satoshi Nakamoto began work on Bitcoin, one of his first tasks was devising an efficient and tamper-proof means of structuring blocks. Which technology did he turn to? That’s right, Merkle trees. As the Bitcoin whitepaper explained, all transactions in a block are “hashed in a Merkle Tree, with only the root included in the block’s hash.”

Satoshi also noted that old blocks could be “compacted by pruning” spent transactions and retaining a Merkle tree of only unspent outputs, using the root to preserve integrity. This capability would come in handy when the first Bitcoin light clients were later developed, allowing users to verify transactions without full data.

Ralph Merkle likely envisaged many potential applications for his cryptographic discovery. But he could never have imagined that his eponymous invention would one day be used to secure a trillion-dollar network. By creating a way to obtain security “for free” out of hashing, he provided Bitcoin with a scalable root of trust.