The rise of blockchain technology has resulted in the creation and launch of numerous projects in a variety of industries: financial services, music and video streaming, real estate, insurance, human resources, and many others. The traditional system of higher education is also among them. Blockchain-based education projects use tokenization to address the typical issues in this sphere such as low motivation of both the students and teachers, high cost of tuition, bureaucracy, lack of practice, as well as the mismatch between college curricula and labor market needs. Having survived the massive attack of online courses, the higher education system is bound to transform as soon as edtech projects gain more traction. Let us take a closer look at this industry and see how it can benefit from the opportunities offered by distributed ledger technology.
We would like to thank the team at Tutellus for their contributions to the design and implementation of the research and to the analysis of the result.
Problems Faced by the Higher Education System
Red Tape Resulting in Inefficiency
The first and foremost issue that impedes the development of university programs and increases the cost of education is bureaucracy. In earlier times, colleges and universities were run by scientists rather than professional managers, but today administrative work requires too much time and effort to combine it with research. As a result, there is a gap between the management and the academic community, and this continues to grow. The faculty, the curricula, and the students are treated as assets, with profit in mind. No wonder that the development direction chosen by many colleges is not what society needs. They aim at making money instead of preparing students for the current and future labor market.
Furthermore, bureaucracy leads to ballooning administrative costs and constantly growing tuition fees (in the last decade the average annual increase comprised 2.4% at private four-year colleges and 3.2% at public four-year colleges). The average cost of a four-year college degree now ranges from $80,000 to $180,000, but it does not guarantee decent employment that would pay back your college loan. By the way, in 2017, student loans comprised a total of $1.3 trillion with 44 million borrowers, being the second largest consumer debt after mortgages. At the same time, the recent statistics show that 34% of college graduates have to work low-income jobs that do not require a college degree, and this percentage has remained quite steady over the last ten years.
In should be also noted that the unemployment rate is combined with a dire labor shortage. It means that the curricula offered by the traditional college system does not suit the real needs of the labor market. Though some colleges form partnerships with businesses to provide additional courses with the companies’ needs in mind, the general situation still leaves much to be desired.
Lack of Practical Exposure
Another grave problem of the traditional higher education system is that students mostly get theoretical knowledge without sufficient practice (medical students excluded). In most cases, college graduates are not prepared for practical tasks or the real world, and that is why many consider the workplace as today’s main university. However, job opportunities are severely limited for those without a college degree.
Besides, a college professor’s success and salary does not depend on their students’ achievements (at least, directly). They depend on a variety of factors, such as the size, location, and type of college (private or public), as well as on the subject being taught. College professors do not get any penalties or salary decreases if their students are not ready to handle real work tasks after graduation. In most cases, faculty are more concerned about academic research and bureaucratic reports than about the true quality of their teaching work.
Non-Crypto Educational Solutions
Given the aforementioned drawbacks of the traditional higher education system, it seems only natural that people resort to other sources of knowledge. According to a report by the Babson Survey Research Group, the number of people enrolled in online courses in 2016 was 5.8 million, and that trend had been positive for the past 13 years. Interestingly enough, the same report states that 28% of college students were enrolled in at least one distance education course, trying to fill the gaps in their curricula. The most popular education projects are listed and briefly described below.
Coursera is by far the largest and the most popular online education provider (30 million users in 2017). It currently offers more than 2,700 courses, which range from machine learning to Roman architecture (though almost 50% of them cover different aspects of technology and business). Coursera has established partnership relations with 100+ universities from 29 countries, and some of its more expensive courses and programs (created in close cooperation with those institutions) provide an opportunity to get college-backed credentials. At the same time, many courses are either completely free or can be accessed for free (but payment is required for getting a Course Certificate).
Udemy is a global marketplace for online learning and teaching: virtually anyone can monetize their knowledge by becoming an instructor. This project was launched in 2010 and after 7 years its audience already encompassed more than 17 million users. Though having a smaller audience than Coursera, Udemy definitely beats it when it comes to the catalogue of courses — at an astounding number of 65,000. None of Udemy courses are accepted for college credit, however; their goal is mostly to improve job-related skills. There is also a special platform called Udemy for Business, which is meant for companies whose staff need skill upgrades.
Udacity is an online course provider with a focus on skills that are currently in demand. They have established partnerships with businesses instead of colleges, and aim to provide a pool of skilled workers for their hiring partners (over 50 companies including IBM, AT&T, SAP, Samsung, Mercedes, iRobot, and Bosch). One of the consequences of this approach is that Udacity’s courses mostly deal with technology. Currently, the catalog of courses consists of five subcategories: artificial intelligence, data science, programming and development, autonomous systems, and business. Besides paid Nanodegree packages, which cost several hundred dollars and are taught by industry experts, there are also free courses from beginner to advanced levels. The total number of Udacity users is over 8 million (as of 2017).
Pros and Cons of Non-Crypto Online Courses
The general advantage of online courses is affordable pricing, which enables young people to explore their interests and choose potential careers without taking out large loans. Working professionals also benefit from such an education format, since they can stay informed of the latest techniques and innovations in their field — or make a smooth career switch. As for college students, they appreciate the possibility to get extra knowledge from the world’s top lecturers for a reasonable price.
However, online education has some inherent drawbacks that interfere in the learning process. The first and foremost one is the low completion rate: more than 90% of students who enroll in online courses fail to complete them. The reason for this is that it is usually quite difficult to provide a high level of engagement without face-to-face interaction. To succeed in online learning one needs a lot of self-motivation, especially in the case of free courses.
Another issue is assignment grading. Coursera and Udemy use the peer review model (each student anonymously reviews three or four other works), but it is far from perfect. The comments left by one’s fellow students can be erroneous, incomprehensible, biased, or outright mean, while anonymity makes it impossible to gauge the received feedback against the information about its author. At Udacity, though, projects are graded by a reviewer who also checks the code.
It is also argued that a grave disadvantage of online courses is that they typically lack in productive discussion. Students have no opportunity to question their teacher’s statements or to ask questions on a one-to-one basis after lectures. Large amounts of people are taught one opinion, which can be detrimental for humanities.
The last drawback of online courses is that they require not only Internet access, but also a good bandwidth. The average size of one course is about 1 GB (videos and assignments included), and some courses can weigh up to 5 GB. Though it seems quite affordable for residents of developed countries, those same requirements can be unattainable for people from underdeveloped areas.
We’ve created an infographic to better explain this idea to you:
Crypto-Based Educational Solutions
Though the blockchain is commonly associated with fintech, there are also several educational projects that try to address the aforementioned drawbacks of online courses with the help of crypto technologies. At the core of such projects, there are certain tokens which are meant to boost both the students’ and the teachers’ motivation. However, different edtech platforms adapt blockchain technology in different ways to solve the industry’s problems. Here is a brief overview of four crypto-based educational projects: Code of Talent, ODEM, NTOK, and Tutellus.
Code of Talent
Code of Talent is an educational platform that promotes micro-learning and can be used either as a standalone tool or as an online follow-up for an offline school program. This platform offers courses consisting of 3-7 minute pieces (which are said to be more effective because of students’ short attention spans). The project team states that this approach to online education provides twice as much engagement as the conventional teaching methods. They use gamification in their courses, making the whole learning process more engaging.
Another distinctive feature of this platform (beside short learning sessions) is that groups have a maximum of 40 students who can directly interact with their teacher and get personalized feedback. Contributors are motivated by tokens, and the value of their contribution is estimated by the community validated merit-based reward system. The project also supports a micro-learning community on Telegram to promote discussion and cooperation.
Code of Talent is a cross-platform solution that can be accessed from any device. Their programs are divided into several categories depending on their total duration (from 21-days “Booster” to 6-months “Mastery”).
NTOK.io is another decentralized education platform, with a special focus on real-time online lessons. It came from a private tutoring platform, called Tutor Ninja, and now provides a transparent blockchain-based ecosystem for peer-to-peer tutor services — with instant direct payments and immutable rankings. This project uses the Ethereum blockchain for its tokens.
Besides offering infrastructure for P2P courses, NTOK also features talent tokenizing: users can create their own tokens in order to raise funds for educational and professional growth. All in all, there are four type of users: tutors who sell their skills and knowledge; students who pay for courses; talent hunters who invest in personal tokens of promising users; and talents who launch their personal tokens for crowdfunding. “Talent tokens” are like prepaid gift cards for future lessons of this particular “talented tutor,” and talent hunters can buy them and benefit from their possible growth in the future.
Both NTOK tokens and personal tokens can be used for in-platform payments to buy tuition services. In addition to this, NTOK has implemented a loyalty system, which grants discounts or bonus tokens to frequent users.
ODEM is the abbreviation for On-Demand Education Marketplace. It is an Ethereum-based interactive platform that uses artificial intelligence and proprietary patent-pending technologies to process complex requests and help users find the perfect curriculum for each case. ODEM’s mission (just like all crypto-based education solutions) is to eliminate intermediaries and make the learning process fairer and more transparent. Its crowdsale took place in February 2017, where almost 6 million ODEM tokens were sold.
How is ODEM different from other edtech projects? It puts the main focus on the creation of real-time in-person courses and programs. In other words, ODEM strives to become the Airbnb of international online education. Its tokens facilitate cross-border payments, making the courses available to people from all over the world. ODEM tokens act as software licenses that provide access to the platform, and also as incentives for both students and tutors. The students’ academic experiences are securely recorded on the blockchain for future sharing.
Tutellus is the largest collaborative educational platform in Latin America. It was launched in 2013 as a non-crypto project and managed to gather an audience of one million from 160 countries. Tutellus currently offers 130,000+ video courses in Spanish and cooperates with 80+ universities. In 2017, it announced the forthcoming decentralization and introduced its own tokens — digital assets that were at the core of the new motivation system for the Tutellus community. The future plans of the project include growing beyond the Spanish-speaking audience and offer courses in other languages.
How does it work? Virtually any user or educational institution can publish their video course on Tutellus and set a price for it. After a quality check, it will be available to anyone who is ready to pay. The tokens are used to reward both the students and the teachers, providing them with both financial and reputational incentives.
There are two kinds of tokens: TUT, which can be traded for cash or used to buy courses; and Smart TUT (also called STUT), which shows user relevance inside the platform. STUT tokens are granted to the best students that show a high level of subject comprehension, and to their teachers as well. Employers can visit Tutellus to judge students by their STUT accounts and offer employment or internships to the most capable ones. As for teachers, they also benefit from considerable STUT amounts— they prove their pedagogical capability and attract more students. In addition to this, 50% of STUT can be traded for TUT, providing an opportunity to actually earn money by learning. It is an especially valuable option for students who are from economically struggling countries.
STUT tokens will be granted to reward the following actions:
- Asking relevant and insightful questions
- Giving valid answers to other students’ questions
- Practical application of the course content
- Passing examinations successfully
- Submitting projects and other relevant works
- Participating in the evaluation of other students with the help of a rubric system
- Participating in tutorials with other students
- Reviewing the course and giving feedback for the improvement of both the platform and the teacher
Each of the above actions has a specified STUT value, which is known to users. The STUT limit for one course is the price of the course in euros multiplied by 100. For example, there will be 1,300 STUT available for a course that costs 13 EUR.
It is fair to say that Tutellus tokens have a good chance of solving the four dire problems in education: low motivation of students, low motivation of teachers, high student loan debts, and the gap between the labor market and the education system.
Pros and Cons of Crypto-Based Education Platforms
Obviously, blockchain-based education platforms do much better than non-crypto solutions when it comes to motivation. The ability to earn tokens by means of diligent studying or by contributing to your students’ success is a great incentive for users. Gamification in the industry is also a promising path, because education does not have to be boring — on the contrary, it must be fascinating and exciting in order to achieve its goals.
Another advantage of edtech projects is that they eliminate unnecessary middlemen and administrators, making the whole system transparent and tamperproof — all while diminishing the students’ expenses at the same time. Token payments can be performed instantly and automatically, without any fees charged by intermediaries.
As for the gap between education and employment, there is certain progress here, too. Some of the edtech platforms provide a means of assessment that can be used by potential employers (like Tutellus), others cooperate directly with businesses and produce a workforce with specifically tailored skills (like Udacity).
Unfortunately, blockchain-based educational projects face the same problem as other distance education platforms — the lack of a person-to-person experience. Nonetheless, some of them (e.g. Code of Talent and NTOK) manage to provide a more personalized educational experience — with smaller groups and private tutoring, respectively. In addition to this, the development of online communication technologies is likely to solve this problem — platforms such as as Google Hangouts may be enhanced by means of a distributed network and provide a closer connection with an edtech teacher or instructor, as well as with fellow students.
In general, edtech platforms have proven to be more viable than non-crypto online courses. They provide financial incentives that are undoubtedly among the most effective stimuli for both students and teachers. Besides that, some projects successfully address the issue of postgraduate unemployment caused by inadequate college curricula. It is also important that all courses and certificates on such platforms are recorded in the blockchain, resulting in transparent and immutable information about credentials. There is a good reason to believe that non-blockchain online courses will sooner or later become an extinct species, while conventional colleges are likely to adopt tokenization as a motivational tool to help steer student success.