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A Merkle tree is a specific type of data construct in which each non-leaf node of the tree contains hash values of its own child nodes. Because a Merkle tree demonstrates effective hashing techniques, it is popular in many industries and is being used to help innovate in finance.
Merkle trees are used in many types of sophisticated data handling technologies, including enterprise software supporting global supply chains, deep learning tools for the healthcare industry, and in the world of finance. The blockchain digital ledger system that drives transparency for bitcoin cryptocurrency transactions also uses Merkle trees. The makeup of the Merkle tree provides the opportunity to reduce the amount of data used in integrity checks, while decreasing input-output packet size and separating data validation from the underlying data.
Merkle trees are also used for a process called “consistency proofing” which helps to check on data outcomes.