Why Is the Merkle Root Essential for Simplified Payment Verification (SPV)?
Simplified Payment Verification (SPV) allows a light client (wallet) to verify that a transaction is included in a block without downloading the entire blockchain. The light client only needs the block header, which contains the Merkle Root, and the Merkle path (a small set of hashes) from the transaction up to the root.
By re-hashing the path and checking if it matches the Merkle Root, the client can cryptographically prove the transaction's inclusion and validity.
Glossar
Simplified Payment Verification
Verification Efficiency ⎊ Simplified Payment Verification SPV is a mechanism allowing light clients to confirm that a transaction has been included in a block without downloading the entire blockchain history.
Merkle Path
Proof ⎊ This is the minimal set of sibling hashes required to reconstruct the Merkle root starting from a specific transaction's hash.
Merkle Root
Derivation ⎊ A Merkle Root functions as a cryptographic summary of all transactions within a block, essential for verifying data integrity in distributed ledger technology.
Payment Verification
Settlement ⎊ Payment verification within cryptocurrency, options trading, and financial derivatives represents a critical procedural step ensuring funds or assets are legitimately transferred and confirmed prior to trade execution or contract fulfillment.
SPV
Architecture ⎊ Special Purpose Vehicles, within cryptocurrency, function as segregated entities designed to isolate risk and facilitate specific financial operations, often involving the issuance or management of tokenized assets.