Theory at the Institute and Beyond, February 2023

by Venkatesan Guruswami (Simons Institute)

This semester at the Simons Institute, the Meta-Complexity program is buzzing along with intense activity in the form of multiple reading groups and a weekly seminar, on top of the usual three workshops and boot camp. A large number of complexity theorists have converged at the Institute, including several students, postdocs, and junior researchers. And all this complexity action is intermixed with some good and varied fun in the form of many self-organized social activities.

Theory readers know what complexity is, but what is the “meta” for? An online dictionary definition of “meta” is a term describing something that “consciously references or comments upon its own subject or features” — e.g., “A movie about making a movie is just so meta—especially when the actors criticize the acting.”

So meta-complexity is the study of complexity of problems that themselves pertain to complexity. A prototypical example is circuit minimization, where the goal is to find the smallest circuit for a given specification. This is modeled as the minimum circuit size problem (MCSP), which is one of the lead actors in meta-complexity: Given the truth table of an n-bit Boolean function f, and a size parameter s, does f have a Boolean circuit of size at most s? (Note that the input size is 2n.)

The MCSP problem was explicitly defined in 2000 by Kabanets and Cai, inspired by Razborov and Rudich’s seminal work on natural proofs from 1994. (Upon some reflection, one can realize that a natural property against some class of circuits is really an average-case, one-sided error algorithm for MCSP on circuits of that class.) Being a “natural” problem, MCSP was in fact considered implicitly even earlier, including in early works on complexity in the former Soviet Union. Yablonski claimed in 1959 that MCSP is not in P (to use modern terminology — the class P wasn’t even defined then). MCSP is easily seen to be in NP — indeed, one can guess a circuit and then check if it computes the function correctly on all inputs — so we of course can’t yet prove that it lies outside P

Leading up to his seminal work on NP-completeness, Levin was in fact trying to show NP-hardness of MCSP, but didn’t succeed. One of the six problems that Levin showed NP-hardness of was DNF-MCSP, where one tries to find a DNF formula of minimum size to compute a given truth table. (Technically, Levin proved only NP-hardness of the partial-function version of the question, where we don’t care about the function value on some inputs.) In fact, this was Problem 2 on Levin’s list, between Problem 1, which was set cover, and Problem 3, which was Boolean formula satisfiability.

The complexity of MCSP remains open — we do not know if it is in P or NP-complete. Resolving this is a natural challenge, but on the surface it might seem like a rather specific curiosity. One reason to care about MCSP is that any NP-hardness proof faces some fundamental challenges — in particular, the function produced on No instances must have large circuits, giving an explicit function in EXP that has large circuits, which seems beyond the reach of current techniques. One might try to circumvent this via randomized or exponential-time reductions, and this has indeed fueled some very interesting recent results, as well as intriguing connections to learning theory, average-case complexity, cryptography, and pseudorandomness.

An “extraneous” reason to care about MCSP and meta-complexity is that the underlying techniques have led to some of the best insights on certain foundational questions that have nothing to do with meta-complexity per se. Meta-complexity has been energized by some significant recent progress on both of these (internal and extraneous) fronts. These advances and momentum are fueling a lot of activity and optimism in the Simons Institute program this semester.


The Blooming of the \(c^3\) LTC Flowers

by Prahladh Harsha

The last year (2021–22) has seen some amazing new constructions of locally testable codes with constant rate and constant fractional distance and testable with a constant number of queries, sometimes referred to as \(c^3\) LTCs [DELLM22, PK22]. The construction of Panteleev and Kalachev’s LTCs [PK22] is almost identical to that of Dinur, Evra, Livne, Lubotzky, and Mozes [DELLM22]; while Dinur et al.’s main goal was to construct \(c^3\) LTCs, Panteleev and Kalachev were motivated by considerations of constructing quantum LDPC codes. In this short note, I give an informal description of some of the ideas that led to the \(c^3\) LTC construction of Dinur et al., focusing more on the interplay between high-dimensional expanders and codes that led to this construction and less on the technical proofs. The original paper of [DELLM22] is extremely well written, and the reader is encouraged to read either the paper for the technical details or Goldreich’s exposition [Gol21] for a less group-theoretic presentation.

What are locally testable codes (LTCs)?

Let us begin by recalling what a code is. A code \(\mathcal{C}\) with blocklength over the Boolean alphabet refers to a subset of \(\{0,1\}^n\), and the elements of \(\mathcal{C}\) are usually referred to as codewords. The rate of the code \(\mathcal{C}\), denoted by \(R(\mathcal{C})\), is \(\frac{\log_2|\mathcal{C}|}{n}\) while the (fractional) distance, denoted by \(\delta(\mathcal{C})\), is the minimum fractional Hamming distance between any two distinct codewords in \(\mathcal{C}\). In this note, we will restrict our attention to linear codes: where the underlying alphabet \(\{0,1\}\) is identified with the field \(GF(2)\) and the code \(\mathcal{C}\) is a \(GF(2)\)-vector-space. In this case, the distance \(\delta\) is the minimum fractional weight of a nonzero codeword in \(\mathcal{C}\). If a code \(\mathcal{C}\) is linear, it can easily be described by the set of (dual) constraints that describe the vector space \(\mathcal{C}\). These constraints are usually referred to as parity checks. If, furthermore, each of these parity checks has constant arity (i.e., each constraint involves only a constant number of codeword locations), then the code is said to be a low-density parity-check code (LDPC). Given a string \(x \in \{0,1\}^n\) and a subset \(Q \subset [n]\) of the coordinate locations, \(x|_Q\) refers to the projection of the string \(x\) to the coordinates in \(Q\). The projected code \(\mathcal{C}|_Q\) is defined as the set of projected codewords, formally, \[\mathcal{C}|_Q := \{ x \in \{0,1\}^Q \colon \exists y \in \{0,1\}^{[n]\setminus Q} \text{ such that } (x,y) \in \mathcal{C}\}.\]

A linear code \(\mathcal{C}\) is said to be \(q\)-locally testable1 if there exists a distribution \(\mathcal{Q}\) over subsets \(Q \subset [n]\) of size at most \(q\) such that the following is satisfied. \[\text{For every } x \in \{0,1\}^n, \text{ we have } \Pr_{Q \sim \mathcal{Q}}[ x|_Q \not\in \mathcal{C}|_Q] = \Omega(\delta(x,\mathcal{C})).\] Here, \(\delta(x,\mathcal{C})\) refers to \(\min_{c \in \mathcal{C}}\delta(x,c)\), the fractional Hamming distance between \(x\) and the code \(\mathcal{C}\).

In general, we will be interested in constructing a family \(\{\mathcal{C}_n\}_{n=1}^{\infty}\) of codes with increasing blocklengths. The holy grail in this area, which was attained by the recent constructions, was to obtain a family of codes that had constant rate and constant fractional distance and were testable with a constant number of queries. Codes that satisfy the first two properties (constant rate and constant fractional distance) are usually referred to as good codes. We will first take a detour and see how good codes are constructed and then return to the question of \(c^3\) LTCs.


The Blind Men and the Quantum Elephants

by Chinmay Nirkhe (IBM Research and UC Berkeley)

In the parable of the blind men and the elephant, a group of blind men encounters a very large object, unbeknownst to them that it is indeed an elephant. They start exploring the object by touch, with each blind man trying to understand the small fraction of the object in front of him. But each blind man feels a different part of the elephant, such as its trunk, its tusks, its feet, etc. For instance, one feels the elephant’s trunk and remarks, “This feels like a thick snake.” Each develops a different view as to what the object he encounters must be, as each of the blind men is offered only a small perspective on the global object.

Only once the blind men bicker and argue over their different views do they finally agree that they are observing something greater and finally recognize that the object they are observing is an elephant. In other words, only from the union of the small local views — each local view being indistinguishable from other objects (such as the elephant’s trunk and a snake) — are the blind men able to surmise that the global object in front of them is an elephant.

Today, we consider a variation on the parable more suited for our modern understanding of physics. In this parable, instead of one object that the blind men observe, there are two. The blind men approach the first object, and each man goes to his location around the object. The first man feels the front of the object and again remarks, “This feels like a thick snake,” while the other men then proceed to feel the object in front of them and make observations as to what they feel. The men then proceed to the second object and again proceed to make observations as to what they feel. The first man again remarks, “This feels like a thick snake,” and, curiously, each blind man makes the exact same observation for the second object as he did for the first. The blind men confer and note that since each man’s observations were the same for both objects and together they had observed the entirety of both objects, then the two objects must be the same and therefore the same elephant. They must have been presented with the same elephant twice.

But what if the blind men were wrong and they were truly observing two very different objects? Is it possible that the two objects were very different but were the same under every local observation? Well, it is possible if they were quantum elephants! An amazing property of two pure quantum objects is that their local views can be exactly the same and yet globally the states are very different (even orthogonal). We call such quantum objects locally indistinguishable, and they are fundamentally interesting objects in quantum information theory. For one, due to being locally indistinguishable, these quantum states (objects) have the property that their entanglement is nontrivial — in this case, this means that for the state to be expressed as the output of a quantum circuit, the depth of the circuit required is large. If a high-depth quantum circuit is required, then this means that the state is far from all classical states and is fundamentally quantum.

Illustration by Chinmay Nirkhe

Locally indistinguishable quantum states are easy to concoct, but it is far more interesting when locally indistinguishable quantum states are “naturally” occurring. A physicist might phrase this as a local Hamiltonian system (i.e., a quantum energy landscape) with the property that after cooling the system to its minimum energy (temperature), the state of the system is a locally indistinguishable quantum state — i.e., is there any hope that a group of blind physicists go on a trek through the quantum jungle and stumble upon a pair of quantum elephants?


Where Do Q-Functions Come From?

by Sean Meyn (University of Florida) and Gergely Neu (Pompeu Fabra University)

One theoretical foundation of reinforcement learning is optimal control, usually rooted in the Markovian variety known as Markov decision processes (MDPs). The MDP model consists of a state process, an action (or input) process, and a one-step reward that is a function of state and action. The goal is to obtain a policy (function from states to actions) that is optimal in some predefined sense. Chris Watkins introduced the Q-function in the 1980s as part of a methodology for reinforcement learning. Given its importance for over three decades, it is not surprising that the question of the true meaning of Q was a hot topic for discussion during the Simons Institute’s Fall 2020 program on Theory of Reinforcement Learning.

This short note focuses on interactions at the start of the program, and research directions inspired in part by these interactions. To start with, who is Q? Was this code for one of Watkins’ friends at Cambridge? The question was posed early on, which led to an online investigation. The mystery was shattered through a response from Chris: we now know that the letter Q stands for quality, not Quinlyn or Quincy. To discuss further questions and potential answers requires some technicalities.

The discounted-cost optimality criterion is a favorite metric for performance in computer science and operations research, and is the setting of the original Q-function formulation. The definition requires a state process \(\{X_k : k\ge 0\}\) and an action (or input) process \(\{A_k : k\ge 0\}\), evolving on respective spaces (which are assumed discrete in this note). There is a controlled transition matrix \(P\) that describes dynamics: \(X_{k+1}\) is distributed according to \(P(\cdot|x,a)\) when \(X_k=x\) and \(A_k=a\), for any action sequence that is adapted to the state sequence.

With \(\gamma\) denoting the discount factor, the Q-function is the solution to a nonlinear fixed-point equation \(T^*Q = Q\) in which \(T^*\) is the Bellman operator: \[\left(T^*Q\right)(x,a) = r(x,a) + \gamma \mathbb{E}_{X’\sim P(\cdot|x,a)}\left[\max_{a’} Q(X’,a’)\right]\] This must hold for each state-action pair \((x,a)\), with the maximum over all possible actions. This is a version of the dynamic programming (DP) equation that has been with us for about seven decades.

The magic of Q-learning, which is based on this DP equation, is that the maximum appears within an expectation. This makes possible the application of Monte Carlo methods to obtain an approximate solution based solely on observations of the actual system to be controlled, or through simulations.

One core idea of modern reinforcement learning (RL) is to find approximate solutions of the DP equation within a function class (e.g., neural networks, as popularized by the deep Q-learning approach of Mnih et al., 2015). While success stories are well-known, useful theory is scarce: we don’t know if a solution exists to an approximate DP equation except in very special settings, and we don’t know if a good approximation will lead to good performance for the resulting policy. We don’t even know if the recursive algorithms that define Q-learning will be stable — estimates may diverge to infinity.

There are many ways to read these negative results, and indeed many articles have been written around this subject. Our own reading is probably among the most radical: without understanding the issues around the existence of solutions to these DP equation approximations or their interpretation, we should search for alternative approximations of dynamic programming suitable for application in RL.

These concerns were raised at Sean Meyn’s boot camp lecture, where he called on listeners to revisit an alternate foundation of optimal control: the linear programming (LP) approach introduced by Manne (1960) and further developed by Denardo (1970) and d’Epenoux (1963). The message was greeted with enthusiasm from some attendees, including Gergely Neu, who responded, “You have blown my mind!” He had been working on his own formulation of this idea, which became logistic Q-learning (more on this below).


Theory at the Institute and Beyond, February 2022

by Prasad Raghavendra (Simons Institute)

It has been only a few months since the last time this column appeared. Yet there is so much to write about that it feels like a year has passed. For one area in particular, a decade’s worth of developments seems to have emerged in a few months’ time. I am talking of course about the phenomenal developments on error-correcting codes that we witnessed in the past few months.

Error-correcting codes
Error-correcting codes encode a message into a longer codeword so that the original message can be recovered even if many of the bits of the codeword are corrupted. Clearly, there is a trade-off between the amount of redundancy introduced by the error-correcting code and the number of errors it can recover from. A gold standard for error-correcting codes is being “constant rate, constant distance,” also referred to as being “asymptotically good.” An asymptotically good code can recover from a constant fraction of bit errors in the codeword, and the codeword is only a constant factor longer than the original message.

Error-correcting codes can be described using a family of “parity checks,” where a parity check on a subset \(S\) of bits is a constraint that there are an even number of \(1\)s within the subset \(S\). A codeword is then a sequence of bits that satisfy all of the parity check constraints. In a low-density parity check (LDPC) code, there is a family of parity checks on constantly many bits each, that together define the code.

Introduced by Gallager in 1960, LDPC codes are central objects in both the theory and the practice of error correction. In 1996, Sipser and Spielman showed how to use expander graphs to construct LDPCs with constant distance and constant rate. Their construction is a thing of beauty. Pick an expander graph and associate one bit on each edge of the graph. For each vertex of the expander graph, the parity of the sum of bits on its edges is even. This construction also admits linear time encoding and decoding algorithms for the same.

Asymptotically good locally testable codes and quantum LDPCs
A locally testable code is one that admits a highly efficient procedure to detect the presence of errors. More precisely, it admits a testing procedure that queries a small number of randomly selected bits in the codeword, and will reject a corrupted codeword with, say, 1% of errors with constant probability. The gold standard would be a constant-query locally testable code, where the testing procedure queries only a constantly many (say, 100) bits of the corrupted codeword.

Locally testable codes have been central to many of the developments in complexity theory for close to three decades now. Linearity testing, aka locally testing the Hadamard code, is still the prime example for property testing and lies at the gateway to the world of probabilistically checkable proofs.

Intuitively for a code to be locally testable, it needs to admit a large number of constant-size parity checks. In other words, locally testability seemingly necessitates the code to have a lot of redundancy. In fact, the classic examples of locally testable codes, such as Hadamard codes or Reed-Muller codes, have codewords that are superpolynomially larger than the message.

Irit Dinur’s ingenious proof of the PCP theorem yielded as a by-product the first locally testable codes where the codewords were only slightly superlinear in size. It was then that one would dare to ask: can locally testability be achieved for “free”? That is, can one have the best of all worlds: a constant-rate, constant-distance code that also admits a constant-query local-tester?

This long-standing open question always seemed out of reach until late last year, when it was resolved affirmatively by two independent groups of researchers simultaneously!


Theory at the Institute and Beyond, September 2021

by Prasad Raghavendra (Simons Institute)

Being in one of the talks in the Simons Institute auditorium, witnessing live and lively interaction with the speaker, feels like the closest thing to normal since the start of the pandemic. There is a sense of tangible joy among the participants just to be sharing the same physical space, let alone the fantastic environs of the Institute. The renewed energy is all there to witness in the programs this semester on Computational Complexity of Statistical Inference (CCSI) and Geometric Methods in Optimization and Sampling (GMOS), both of which are now in full swing. Although masking is maintained, it doesn’t seem to change the quintessential Simons program experience even a little bit. I am referring, of course, to the constant feeling of missing out on all the incredibly interesting activities going on, much of which one is unable to fit into their schedule.

At least some of the palpable energy can be attributed to over 40 postdocs and research fellows who have arrived at the Institute this semester, many of whom will stay on for a year or two. This extraordinary group of young researchers covers the whole gamut of topics, ranging from cryptography, quantum computing, and fairness to machine learning, data structures, algorithms, and complexity theory. Each of these postdocs and fellows gave a 10-minute presentation at the “Meet the Fellows’’ welcome event that the Institute held on September 8 and 9. Check out their talks for glimpses of the cutting edge in all these subfields of theory.

An advance in algebraic circuit complexity
This time around, there is some good news from the front lines on circuit complexity, one of the most challenging arenas within theoretical computer science.

An algebraic circuit consists of gates, each of which carries out either addition or multiplication over some field, say real numbers. The depth of the circuit is the length of the longest path from the output to one of its inputs. Naturally, an algebraic circuit computes a polynomial over its inputs.

In the world of Boolean circuits with AND/OR/NOT gates, lower bounds against constant depth circuits, aka AC0 circuit lower bounds, have been known since the 1980s and are one of the most influential results in complexity theory. For general algebraic circuits over a large field (say reals), even superpolynomial lower bounds for depth three circuits had remained elusive. In a remarkable paper, Nutan Limaye, Srikanth Srinivasan, and Sébastien Tavenas have obtained the first superpolynomial lower bounds against general algebraic circuits of all constant depths over fields of characteristic zero (say reals). Furthermore, the lower-bound result is shown for a simple polynomial known as “iterated matrix multiplication” whose input consists of \(d\) matrices \(X_1,\ldots,X_d\) of dimension \(n \times n\), and the goal is to compute a fixed entry of their product \(X_1 \cdot X_2 \cdots X_d\). The same work also obtains a depth hierarchy theorem for algebraic circuits showing that for every depth D, there is an explicit polynomial that can be computed by a depth D circuit of size s, but requires circuits of size superpolynomial in s if the depth is D-1.

Remarkable work of Matthew Brennan
The theory community suffered a terrible loss this year with the tragic and untimely passing of one of our rising stars, Matthew Brennan. While still a graduate student at MIT, Matthew almost single-handedly pushed forward an ambitious research program at the intersection of computational complexity and statistics. Here we will try to give a glimpse of Matthew’s extensive body of research.


Trends in Machine Learning Theory

Welcome to ALT Highlights, a series of blog posts spotlighting various happenings at the recent conference ALT 2021, including plenary talks, tutorials, trends in learning theory, and more! To reach a broad audience, the series is disseminated as guest posts on different blogs in machine learning and theoretical computer science. This initiative is organized by the Learning Theory Alliance and is overseen by Gautam Kamath. All posts in ALT Highlights are indexed on the official Learning Theory Alliance blog.

This is the sixth and final post in the series, on trends in machine learning theory, written by Margalit GlasgowMichal Moshkovitz, and Cyrus Rashtchian.

Throughout the last few decades, we have witnessed unprecedented growth of machine learning. Originally a topic formalized by a small group of computer scientists, machine learning now impacts many areas: the physical sciences, medicine, commerce, finance, urban planning, and more. The rapid growth of machine learning can be partially attributed to the availability of large amounts of data and the development of powerful computing devices. Another important factor is that machine learning has foundations in many other fields, such as theoretical computer science, algorithms, applied mathematics, statistics, and optimization. 

If machine learning is already mathematically rooted in many existing research areas, why do we need a field solely dedicated to learning theory? According to Daniel Hsu, “Learning theory serves (at least) two purposes: to help make sense of machine learning, and also to explore the capabilities and limitations of learning algorithms.” Besides finding innovative applications for existing tools, learning theorists also provide answers to long-standing problems and ask new fundamental questions. 

Modern learning theory goes beyond classical statistical and computer science paradigms by: 

  • developing insights about specific computational models (e.g., neural networks) 
  • analyzing popular learning algorithms (e.g., stochastic gradient descent)
  • taking into account data distributions (e.g., margin bounds or manifold assumptions)
  • adding auxiliary goals (e.g., robustness or privacy), and 
  • rethinking how algorithms interact with and access data (e.g., online or reinforcement learning).

By digging deep into the basic questions, researchers generate new concepts and models that change the way we solve problems and help us understand emerging phenomena.

This article provides a brief overview of three key areas in machine learning theory: new learning paradigms, trustworthy machine learning, and reinforcement learning. We describe the main thrust of each of these areas, as well as point to a few papers from ALT 2021 (the 32nd International Conference on Algorithmic Learning Theory) that touch each of these topics. To share a broader view, we also asked experts in the areas to comment on the field and on their recent papers. Needless to say, this article only scratches the surface. At the end, we point to places to learn more about learning theory.


Theory at the Institute and Beyond, May 2021

by Prasad Raghavendra (Simons Institute)

Another semester of remote activities at the Simons Institute draws to a close. In our second semester of remote operations, many of the quirks of running programs online had been ironed out. But pesky challenges such as participants being in different time zones remained. To cope with these, the programs spread their workshop activities throughout the semester. Not only did this help with the time zones, but it helped keep up the intensity all through the semester.

One hopes that the Institute will never need to organize a remote semester again. At the end of June, we are excited to host the Summer Cluster in Quantum Computation, our first in-person activity since COVID-19 hit. By all expectations, the programs in the fall will likely be fairly close to the normal that we have all been longing for.

In fact, it looks like the Institute will be buzzing with activities in the fall, even more than it used to be, as if that were possible. In a few months, the Institute will welcome more than 40 talented young researchers as postdoctoral researchers and program fellows. They cover the whole gamut of areas, ranging from complexity theory and algorithms to quantum computation and machine learning.

As we settle into a different normal again, one wonders what this new normal will look like a few years from now. In particular, what aspects of this COVID era will continue to stay with us theorists, say, five years from now? Will we have online conferences and workshops? Will meeting anyone from anywhere seem as easy as it does now? How often will a speaker be physically present at our seminars? Only time will tell.

Solving linear systems faster
The ACM SODA conference held virtually in January featured a breakthrough result in algorithms for one of the oldest computational problems — namely, solving a system of linear equations. Richard Peng and Santosh Vempala exhibited a new algorithm to solve sparse linear systems that beats matrix multiplication, in certain regimes of parameters.


Research Vignette: Cryptography and Game Theory for Blockchains

by Vassilis Zikas (University of Edinburgh)

Blockchains and decentralized ledgers are creating a new reality for modern society. A major scientific impact of this new reality is that it creates an interdisciplinary arena where traditionally independent research areas, such as cryptography and game theory/economics, need to work together to address the relevant questions. The Simons Institute’s Fall 2019 program on Proofs, Consensus, and Decentralizing Society fostered much-needed cross-disciplinary collaboration by bringing together researchers from these disciplines.

An interdisciplinary research arena

The study of the interplay of cryptography and game theory/economics within the blockchain consists of several subareas. Here we discuss three such areas, with a focus on Bitcoin, as one of the most widely studied and adopted to date blockchains and cryptocurrencies. We stress that the relevant literature is huge and that discussing it all here is beyond the scope of this research vignette.

  1. Cryptographic security and economic robustnessThe works of Garay et al. [12] and Pass et al. [17] initiated the rigorous cryptographic study of the Bitcoin blockchain protocol and proved that under common assumptions about the underlying hash function and assuming the majority of the hashing power in the system is invested in executing the Bitcoin protocol (rather than attacking it), the protocol achieves a number of basic properties, such as common prefix (corresponding to the traditional notion of safety), chain growth (corresponding to liveness), and chain quality (ensuring that honest parties get to contribute blocks at an acceptable frequency). Follow-up work by Badertscher et al. [4] defined the functionality offered by the Bitcoin ledger and proved the protocol’s security under the above honest-majority assumption in a composable framework. This enables using the ledger functionality directly — without worrying about implementation details — within higher-level protocols. These initial works have ignited a number of follow-ups aiming at relaxing the underlying assumptions and/or tuning the protocol abstraction to better capture reality.

    Parallel to the cryptographic security of blockchain protocols, their economic robustness — i.e., their resilience to incentive-driven attacks/misbehavior — has been extensively investigated. A classical example here is the work of Eyal and Sirer [9], which abstracted the protocol execution as a simple mining game and demonstrated that by withholding mined blocks and strategically releasing them, attackers with favorable network conditions might be incentivized to deviate from the Bitcoin protocol, even when they control only a minority of the hashing power. Note that such deviations cannot affect the worst-case security guarantees established in the cryptographic security proofs, but they can push them to their limits. For instance, although a selfish miner cannot break common prefix and chain quality, they can temporarily create the longest-allowed forks and/or minimize the number of blocks contributed by honest miners to the worst-case value allowed by chain quality.

  2. Economics on blockchains. Independently of the questions about their economic robustness, blockchains and their associated cryptocurrencies have created a new scientific playground for economists and game theorists to develop and test new theories and confirm old ones. Indicatively, Huberman et al. [15] investigated how an ideal abstraction of Bitcoin yields a new market design paradigm where market forces do not control the functionality of the underlying payment system. They showed how analyzing this paradigm can explain behavioral aspects of Bitcoin and pointed to interesting modifications that can affect the efficiency of the protocol itself. Similarly, Benigno et al. [5] demonstrated how under common economics assumptions, equipping a two-country economy with a global cryptocurrency can create market forces driving the nominal interest rates to be equal in the two countries and yielding a rate relation between the two national currencies; and Prat and Walter [18] proposed a model using the Bitcoin-U.S. dollar exchange rate to forecast the computing power of the Bitcoin network.

  3. Blockchain-induced incentives on cryptographic protocols. A third type of blockchain-related problem where cryptography and game theory meet is the design of more efficient and resilient cryptographic protocols using incentives induced by blockchains and cryptocurrencies. The classical example here is fair multiparty computation (in short, fair MPC). In MPC, n parties wish to run a protocol to jointly compute a function on their private data. Fairness in this context requires that if a worst-case adversary — controlling and coordinating the (malicious) parties attacking the protocol — learns (any information on) the output, then the honest parties should also learn it. Cleve’s well-known impossibility result [8] mandates that if the adversary controls a majority of parties, then fairness is impossible. Intuitively, the reason is that as the protocol has to tolerate any adversarial coalition, the actual corrupted parties might be the ones to first jointly learn such information; once they do, they can stop playing, thereby preventing other parties from also learning it. In [2, 6], it was shown that using the Bitcoin blockchain as an automated escrow mechanism, one can enforce a version of fairness based on collaterals where either nobody learns any information or if someone does and prevents others from also learning it, then he loses his collateral to them. Assuming the adversary values his collateral higher than breaking fairness, this mechanism induces a fair evaluation. These results were subsequently extended to ensure robustness [16], i.e., ensure that the protocol will not fail and either it will fairly conclude or the adversary will lose his collateral.


Research Vignette: Statistical Learning-Aided Design of a Blockchain Payment System

by Xiaowu Dai (UC Berkeley)

A blockchain-based payment system uses a decentralized network of computers (miners) to verify transactions and maintain the ledger containing transaction history. The blockchain design is governed by a computer protocol and does not require trust in any centralized organization. The system supports only transactions of its native coins, such as bitcoins, which have value because payment recipients have confidence in their future usefulness. The design of such a novel system was proposed by [11]. It is of interest to study the mechanism design of the blockchain payment system and related questions on transparency and fairness [1, 6, 7, 13].

This project is connected with what was explored during the Simons Institute’s Fall 2019 program on Proofs, Consensus, and Decentralizing Society, especially with the algorithms and economics questions that emerged from the blockchain-based systems.

The blockchain payment system can be modeled as a two-sided market that intermediates between users and miners [5, 9]. The rise in Bitcoin transaction volume, coupled with limited capacity on the number of blocks that can be posted to the blockchain, raises transaction delays and motivates users to pay transaction fees for service priority. We want to understand how the transaction fees influence users’ willingness to participate in the payment system. Our analysis suggests a simple modification on the design by adding a statistical learning-aid recommendation of transaction fees for users. In particular, we build confidence bands for the regression function \(f(\cdot)\) in the model

\[\text{delay}\ \text{ti}\text{me} = f\left( \text{transaction}\ \text{fee} \right) + g\left( \text{control} \right) + \text{disturbance}\text{.}\]

Here, the control variable includes the number of pending transactions, fees of pending transactions, current infrastructure level, rate of block addition to the ledger, and history of random arrival of transactions, among others [12]. The \(f(\cdot)\) is the main nonparametric regression function that we want to infer, and the function \(g(\cdot)\) is the nuisance parameter. The dimension of the control vector can be large relative to the sample size. We develop a simple procedure to construct an honest confidence band for \(f(\cdot)\), a method that builds on the recently developed framework (e.g., [2, 3]). The confidence band would cover the true \(f(\cdot)\) at the nominal level (say, 95% level) uniformly over a large function space given a large sample of data. The notion of honesty is closely related to the use of the worst-case criterion that is necessary for good finite-sample performance [10].

This statistical learning-aid recommendation could provide the relationship between the transaction fees and the predicted transaction delay time, together with confidence bands. It leads to several implications. First, the recommendation enables the transparency of the blockchain payment system mechanism. It allows a direct comparison with the traditional payment system operated by a centralized firm like Visa or PayPal. The firm can reverse transactions in case of error or fraud, a property that is lacking in the blockchain payment system. On the other hand, users benefit from the transparency since they can decide which payment system is better for processing the transaction and how to balance the trade-off between transaction fees and transaction delay. Second, the blockchain payment system enjoys the Vickrey, Clarke, Groves (VCG) property in that each user pays a transaction fee equal to the externality on other users caused by delaying others’ transactions [4, 8, 9, 14]. The recommendation also adds the fairness guarantee; that way, with high probability, the transaction fee is close to the actual value of service priority and users avoid paying extra.