What Is a Merkle Tree and How Does It Use Hashing to Verify Transactions?

A Merkle Tree, or hash tree, is a data structure used to efficiently summarize and verify the integrity of large sets of data, such as all the transactions in a Bitcoin block. It is built by repeatedly hashing pairs of transaction hashes until only a single hash remains, called the Merkle Root.

This root is included in the block header. A single transaction can be verified by only checking the path from its hash up to the Merkle Root, saving significant computational resources.