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Blockchain for education and skills? A big maybe.

Over the past year, the value of blockchain’s most notorious application, Bitcoin, soared from $20 billion to over $300 billion before halving again. Since before that rollercoaster ride, blockchain enthusiasts have touted the technology’s potential for solving longstanding problems in a wide array of fields. But what could it have to offer for education and labor policy?

That question brought together all kinds of experts – from ed-tech outfits to college staff to policy wonks – at a convening organized by the Lumina Foundation in Indianapolis last fall. Together, we grappled with the possible uses and overall utility of the technology in America’s education and employment markets.

Before that, of course, most of us had to confront an obvious question.

What is blockchain technology?

Blockchain is a record-keeping system comprised of a continuously growing list of data batches called blocks. The most recent block serves as a ledger of each user’s current resources; the set of all blocks ever written (the blockchain) contains the whole history of transactions made by users. 

Each block’s connection to its predecessor is secured with public-key cryptography, the same type of protocol your computer is using to securely access this website right now. In a blockchain application, public-key cryptography allows users to validate that other blockchain users actually have the resources they say they do, while making it practically impossible to tamper with a previous block of data without raising alarms. But unlike the central database that stores this webpage’s digital content, a blockchain is a decentralized or “distributed” data store, where each user of an application automatically downloads a copy of that application’s blockchain. On a public blockchain like Bitcoin (blockchains can also be private), each new block of records must be validated by a majority of users; to add a fraudulent new block, you’d have to hack at least half of the devices with a copy of that blockchain in the space of a few minutes or even seconds.

This is the source of optimists’ greatest hopes for blockchain technology: security and authenticity without a central authority, the thinking goes, means blockchain users can have complete ownership of their information. But what would that look like when applied to the worlds of education and employment? And who, in practice, would blockchain technology help?

Blockchain applications in education and labor markets

For the moment, possible uses for blockchain in education and employment center on two objectives: increasing the shareability of educational credentials and enabling workforce collaboration between competing employers.

Credentials are built on trust, and to establish it, most credentials still depend on a central authority. For degree credentials, that authority is the college registrar. Anybody can claim to have a degree; to be sure it’s real, institutions and employers have few choices but to ask for a sealed envelope from the registrar’s office containing a raised-seal transcript or proof of graduation.

Blockchain applications could change that. Last summer, MIT offered several hundred graduates the option of receiving a digital diploma in addition to a paper one. Using a Blockcerts wallet app on their smartphones, these graduates can instantly share an MIT-verified digital diploma with a prospective employer or educational institution – without contacting the registrar’s office, and without MIT having to maintain a publicly accessible diploma database.

Blockchain has been proposed as a solution for a problem on another side of the hiring process, too. Especially in industries with stiff competition for talent, employers are wary of sharing details about the specific skills they need and the strategies they use to find applicants who have them – even though sharing that information might help institutions, industry associations, and training providers supply better-aligned educational programs. This careful secrecy is an example of a collective action problem, where individuals forgo actions that would provide overall benefits to the group – in this case, providing more transparency around hiring and training practices – for fear of consequences that would affect them individually.

Collective action problems like these are particularly amenable to blockchain applications, writes Christopher Mims in the Wall Street Journal. By using blockchain technology to anonymously share data on the competencies and training they require for different occupations – either through a private community of practice or a broader public jobs registry – employers could help training providers scale up effective training practices without showing their hand to competitors, and without individual institutions having to go door-to-door to different employers for input on needed skills. The Talent Pipeline Management (TPM) initiative, organized by the US Chamber of Commerce Foundation and the George Washington Institute of Public Policy and presented at the Lumina convening last fall, proposes using blockchain technology to enable this kind of sharing.

But will it help?

A common criticism of blockchain technology is that it is a new hammer for the same nail or, less generously, a solution in search of problems. For conventional degrees at least, blockchain is probably the wrong hammer for now.

Blockchain implementation can be expensive and time-consuming, and even if an institution goes all-in on blockchain credentials, there’s no guarantee that other institutions or their graduates’ prospective employers will accept them. And as with email passwords, human users are the weakest link in blockchain security. If graduates aren’t instructed in safety and best practices for blockchain credentials, the credentials could be even harder to use – and possibly less secure – than a paper diploma or transcript.

The blockchain case for certain non-degree credentials is stronger, however. Proponents of open-source digital credentials like Open Badges are optimistic about enhancing the standard with blockchain technology, and occupational credentials like licenses and certifications could benefit, too, by adapting blockchain features already in use as smart contracts. That would enable issuers to automatically update or revoke employee permissions when credentials elapse or when a new training protocol is rolled out.

Even better, data sharing schemes like TPM could revolutionize the way employers engage with the education sector to recruit and hire talent. Though the first beneficiaries would be employers, TPM’s leaders also envision a comprehensive labor market information system that could securely connect data about credentials, occupations, and individual learners to support policymakers in channeling public dollars towards programs and providers with the best outcomes. 

Still, any benefit – to employers or to policymakers – will depend on employer buy-in. While blockchain technology offers an elegant solution for securely sharing occupational data, few employers are likely to go through the trouble without a convincing proof-of-concept. A pilot program to see if blockchain technology can really enable better employer collaboration on workforce and education issues could be a worthy target for public investment. Hot-button sectors like cybersecurity or advanced manufacturing would be especially ripe for experimentation. 

But though the theoretical benefits of blockchain technology to employers and policymakers are clear enough, any proposal or pilot should be careful to keep American workers’ interests in mind. Unless blockchain applications make it easier for individual Americans to successfully navigate our complex education and job markets, the technology will only amount to a solution that causes more problems.