Block Structure

What is Merkle Root used for?

Merkle root (hashed concat of hashes) contains all previous transaction hashses, and these are yet combined to make another hash for the next block.

Limits on block size in bitcoin

The reason for imposing a limit on the block size in Bitcoin is due to the performance of the database lock required to process transactions.

As a result, only about 2000 transactions can fit into one block due to this limitation, resulting in a transaction processing capacity of 3-7 transactions per second (tps). Miners implement strategies to maximize transaction fees due to this block size limit. They prioritize transactions with higher fees or smaller transaction data. As the number of Bitcoin users increases, transaction fees rise (further exacerbated by the increasing price of Bitcoin). In 2017, a hard fork was implemented known as Segregated Witness (SegWit) to address these issues.