How Should We Teach Blockchain?
- To exploit the advantages of blockchain technology, organizations will need both computer scientists who can navigate the technology and general managers who know when to deploy it.
- As they train the next generation of leaders, business schools have the obligation to teach blockchain effectively to students with both technical and nontechnical backgrounds.
- To deepen their understanding of different blockchain setups, students should be exposed to real-world use cases and complete practical, hands-on projects where they can apply the technology.
Blockchain technology has the potential to change many areas of our lives, from our urban infrastructure to our financial system. Even so, this innovation remains largely a mystery to most people. When many think of the technology, which is based on different forms of cryptography, they think of dark back rooms, complex algorithms, and indecipherable strings of numbers and letters. But while these clichés are partially true, they are more reminiscent of science fiction movies than real-world businesses.
To conduct fruitful discussions about blockchain in our classrooms, we must help students understand its potential to disrupt our current economic and social structures. It promises to decentralize our traditional monetary value systems and dissolve the institutional technologies used by centralized mediators for human trust, such as banks.
As we decide how to help students grasp the implications of the technology, we must inevitably ask the following question: How should we design optimal “blockchain education” for students learning this emerging topic?
Based on our own experiences teaching blockchain and participating in numerous practical cooperation projects, we aim to demystify this new arena for educators, so that they know how to teach it effectively to technical and nontechnical students alike. We believe that business schools have a special duty to get this right as they train the next generation of leaders who will shape our future economy.
Understanding Two Important Dimensions
The first thing we must stress is that there is no “one” blockchain technology. When we talk about blockchain, we are talking about a technological principle that goes far beyond currently hyped cryptocurrency trading platforms and cryptoassets like Bitcoin and Ethereum. Blockchain is like a chameleon that can be applied differently, depending on the context.
Central to blockchain technology are the underlying methods of cryptography. In a blockchain network, information is stored in consecutive blocks, which contain transactional information. Combined with cryptographic mechanisms, this makes it possible for blockchains to store transactions or other values in a tamper-proof and transparent manner. The result is a decentralized register, created for various application purposes, which cannot be manipulated by malicious actors.
To prepare our students for an economy and a society prospering through the use of blockchain, we must ensure they understand—and know how to apply—two key dimensions of the technology:
Transparency. One of the primary advantages of blockchain is related to the settlement layer, where the technology can be applied in a variety of contexts. This new form of information infrastructure can deliver cost, transparency, and other organizational advantages in the management of a range of transactions. As a result, companies could potentially gain valuable economic advantages in competitive landscapes that rely on the efficient management of transactional information, whether used in supply chains to create blockchain-based logistics management or in the pharmaceutical industry to trace the origin of individual batches of drugs.
To gain this advantage, companies first and foremost will need to hire “techies” who can prepare and implement technically optimal blockchain solutions. But organizations also will need general managers who can determine from a business perspective whether the use of blockchain technology will bring an advantage or not. As an example, pharmaceutical entrepreneurs need to understand what it means to rely on either a permissioned or permissionless infrastructure and whether proof-of-work or proof-of-stake is the right choice. They do not need to understand the algorithms in much detail.
Decentralization. The technology also serves as one of the fundamental drivers for Web 3.0, which describes the next stage of the internet’s development. One of the key concepts of Web 3.0 involves decentralized finance (DeFi), which encompasses the development of an alternative financial and economic system consisting of different token economies. This system is characterized by high levels of decentralization in economic organizations at various stages of value creation.
Packy McCormick explains this concept well in what developers call the Web 3 Tech Stack. McCormick, who is a developer and founder of the venture fund Not Boring Capital, divides the Web3 Tech Stack into five central layers that perform different functions from the perspective of Web 3.0.
The first, Layer 0, refers to basic infrastructure components such as peer-to-peer internet overlay protocols like the domain name system (known as DNS). Layer 1 includes popular protocols such as Bitcoin or Ethereum, with the latter being one of the basic settlement layers for DeFi. Layers 2 to 4 contain more complex technological components used for facilitating transactions and interaction with the user—a popular example might be MetaMask, which has been widely popularized among DeFi users to safekeep and self-manage different tokens.
It will be general managers, not computer specialists, who will determine whether the use of blockchain technology will bring organizations competitive advantage.
In addition, there is a complex economic component called token economics, or “tokenomics” for short. This component, which incentivizes participation through different token or coins, anchors economic systems for decentralized incentive management in unforgeable computer code. This code takes the form of smart contracts, which are secure and trigger transactions automatically based on predetermined conditions; these contracts do not require any intermediary to be carried out.
To exploit the advantages of blockchain’s transparency and decentralized platform structures, organizations will certainly need technologically savvy managers who can navigate these layers and implement optimal blockchain solutions for specific use cases. But it will be general managers, not computer specialists, who will determine whether the use of blockchain technology will bring their organizations competitive advantage. These individuals will not need to know the algorithms of blockchain at a deep level, but they will need a broad fundamental knowledge of the technology's design and benefits.
Understanding the Practical Reality
To understand how to deploy blockchain technology for a specific context, students would have to extensively study information science and mathematics, especially cryptography. Few general business students have time in their programs to master the technical side of blockchain.
Given blockchain’s importance to business, however, all business students have time to study the crucial interface between business applications and the dimensions of blockchain described above. They have time to study, for example, the basic technological makeup of blockchain systems, the nature of decentralized autonomous organizations, and the interface between different technological blockchain layers and an organization’s operational requirements.
Students also should be given opportunities to weigh in on debates surrounding blockchain’s technological implementation. For instance, some consensus protocols in public blockchains—which refer to the method of verifying transactions—require massive amounts of energy, causing some critics to raise concerns about the negative impact on the environment. Other industry experts debate whether these platforms are as secure as they are made out to be.
But the best way for us to deepen our students’ basic understanding of blockchain is to ask them to complete practical, hands-on projects where they can apply these concepts in practice. Students learn more when we stay true to this principle: Theory is good, but practice is better.
This is our approach at the Frankfurt School Blockchain Center (FSBC), a think tank where we bring together academia and industry for research, education, prototyping, and venture development. We are particularly interested in exposing students to real-world use cases for blockchain, since students will be working on such solutions after they complete their programs.
We can encourage students to begin every case study or project with a basic question: “Do we even need blockchain technology in this context?”
For example, FSBC has worked with INVERS—a company that builds digital ecosystems for sharing cars, bikes, and scooters—to develop an e-mobility prototype based on blockchain technology. The think tank also has worked with a partner to create a proof of concept for trading loans based on Ethereum cryptocurrency.
Such collaborations with partners not only allow us to explore the technology’s application in practice, but also create opportunities for teaching and future research. Industry partnerships are a crucial part of any blockchain curriculum, because they provide specific use cases for our students to analyze as part of their projects.
Conferences are another opportunity for business schools to expose their students to the rapidly growing blockchain education ecosystem. The FSBC builds community in the sector through its Crypto Assets Conference, where students and faculty can network and identify opportunities for collaboration.
Understanding the Implications for Education
In the end, only a small number of business school graduates will need to understand the deep mechanisms underlying cryptography. These graduates will be the computer scientists and cryptographers that businesses need on their IT teams to deploy and support the design of their blockchain infrastructure.
But most of our students will become the managers who deploy these platforms, not the computer scientists who design them. These students will need to know the basics of blockchain—which they can easily learn in a few months.
Then, we can guide them as they explore the economic implications and appropriate contexts for application. We can encourage them to begin every case study or project with a basic question: “Do we even need blockchain technology in this context?” It won’t be enough for them to understand how blockchain works—they also must know when the technology is not the right solution. For example, a logistics company recently worked on a project with our students. Together, they determined that the company did not need to adopt blockchain technology to achieve efficiency gains in its daily operations; instead, they found that the company needed only to restructure its database and processes.
An integrative approach to teaching blockchain—where general business students, information science students, and corporate partners work together to deploy the technology effectively—will prevail in the future. To know how to use blockchain effectively for competitive advantage, all of our students inevitably will need to “learn by doing.”