How does edX guarantee that certificates are not earned fraudulently, with a proctored exam for instance?

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No one can ever completely protect against cheating in an online course. But if you want the certificate from edX, you have to pass the lessons and then pay a fee. Of course you can pay the fee and cheat or have someone do the lessons for you, but what is the point in doing that? The point of edX is to learn useful skills that you can apply in employment. If you cheat and then use the certificate(s) to gain employment and then don’t know the skills or have the knowledge to do the job, you will be fired. Money down the drain. I think for an isolated course or two, this can be a good way to get your feet wet, but, for example, a Masters degree in Engineering from edX is not going to have a lot of value in the job market.

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