Blockchain incentives: consensus and fairness

An increasing number of industry sectors in the UK and worldwide are becoming aware of the possible benefits of blockchains. Blockchain protocols constitute a revolutionary way to achieve agreement over a network of mutually distrusting agents, without the need of an external trusted authority. Consider, for example, a fundamental problem in electronic commerce, which stems from the fact that the exchange of a good that is sold (possibly digital good or service) and the payment can not happen simultaneously. Traditionally, the lack of trust between the buyer and the seller has been dealt with by introducing a trusted third party. Blockchain technology uses cryptography and economic theory to govern participants in a decentralised network and addresses the need for trust between them without requiring a trusted third party. Blockchain protocols are at the forefront of research, as they are applicable in a wide range of domains and have the potential to alter and improve how digital society operates; hence, the importance of their study is paramount. Examples of real world blockchain applications include cross-currency payments, P2P lending platforms, secure data sharing in healthcare, marketplaces for gaming, and payment platforms in the musical industry, among others. There exist global real estate marketplaces with decentralised title registry systems, while some countries are even implementing blockchains for land registry. This technology has potential to reform the mode of operation of numerous organisations and industries through the reduction of severe administrative cost related to many processes (exchange of digital information; fast, secure, and efficient transactions; offering transparency and traceability), which will lead to a plethora of other benefits. However, despite its wide adoption in practice, this new technology remains largely unexplored in theoretical terms. A better understanding of fundamental aspects of blockchain technology can extend its reach and reveal new potential. It is also an essential first step for identifying vulnerabilities and mitigating them in practice. Integrity (e.g. incorruptibility) and fairness (e.g. impartiality) are both crucial for the future of the blockchain technology. Failure to identify any form of security risk and bias can lead to hindering the trust and willingness of the public to exploit the relevant benefit of blockchains. The proposed research includes an in-depth analysis of blockchain protocols from a theoretical perspective with the aim to inform best practice in blockchain design and development. Our methodology will focus on an algorithmic game-theoretic approach, which lies at the intersection of Computer Science and Economics (EconCS). Algorithmic Game Theory provides a mathematical framework that allows us to consider the possible actions of the agents involved in using and maintaining a blockchain, towards predicting outcomes based on the agents' relevant motives. Overall, we will systematically analyse blockchain protocols with respect to the strategic behaviour of the stakeholders and related fairness properties. We will identify system vulnerabilities of current protocols, in terms of security and fairness, and propose solutions in the form of theoretical blockchain models, with improved security guarantees. Our findings can inform steps towards managing blockchain systems (e.g. recent strive for cryptocurrency regulation). The overarching aim of the project is the design of new, more efficient blockchain protocols, that will also be easier to adopt by society.