PhD.CSCI Seminar 1: Muhammad Rehman

Achieving Fairness in an Automated, Distributed and
Decentralized Trustless Environment

Advisor: Dr. Charlie Obimbo
Co-Advisor: Dr. Getu Hailu (Department of F.A.R.E)
Advisory Committee: Dr. Xiaodong Lin
Advisory Committee: Dr. Hassan Khan

ABSTRACT:

For a transaction, the involved parties have to trust a neutral entity that could ensure a trustful transaction
and deal with any situation in a fair manner acceptable to all stake holders. In our real life we achieve this
by having some authoritative entity in the middle, e.g. notary, to oversee the transaction. However, it is a
challenge in an e-transaction in a distributed environment which is essentially considered a trustless system
where transacting parties do not need to have a middleman to ensure the fairness. Blockchain offers
trustless transaction in a distributed environment without the need of a trusted middle entity but it is limited
to cryptocurrency transactions. What if we want to have a property sale in the same fashion i.e. automated,
decentralized and trustless way without involving a middle entity? Smart contract is a set of self-executable
code on underlying blockchain that ensures the fulfillment of terms and conditions set between the parties
without involving an authoritative facilitator. However, sometimes in smart contracts, fairness becomes
questionable if one or more parties are inclined to cheat.

Fairness is a key ingredient in any financial transaction. Transactions can’t work properly unless a rigid
fairness policy is in place. Fairness could have been achieved differently in unique situations with the
presence of pre-defined terms and conditions aka rules. What we have to have in an automated blockchain
smart contract system that allows us to achieve fair outcome when unknown parties, who do not trust each
other, want to execute a transaction without involving any intermediaries to enforce their rules for fairness?
This could be achieved in the presence of a set of rules developed using special security protocols,
encryption/decryption techniques, cryptographic hashes and zero knowledge proof to build a game-like
solution that ensures the fairness without having any ruling authority.