Blockchain technology is surely the future because it’s secure, reliable, and faster than any of the current technologies in works right now. A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a time-stamp, and transaction data.
In this article, we are going to talk about the developments and implementations of Blockchain technology which is either proposed or happening in the Diamond industry right now.
To verify and trace natural diamonds using Blockchain technology
According to a recent report, Scientists have developed a new method based on blockchain technology to help verify and trace natural diamonds and fully guarantee their authenticity.
The researchers from the National University of Science and Technology in Russia mentioned that in a situation where natural, synthetic and fake stones exist in the diamond market, the system could protect the financial assets of market participants.
Modern synthetic diamonds are almost as good as natural diamonds in terms of quality and chemical composition. With these trends, gemologists often cannot distinguish a good synthetic diamond from a natural one. The solution proposed by Russian cryptographs and members of the Russian startup Bitcarat.com is a unique system of traceability of natural diamonds.
The system traces the entire history of the transfer of rights of individual stones, starting from the moment it is mined. Moreover, it is absolutely impossible to falsify this history.
According to the concept, while being mined, each natural diamond will be provided with a special digital code. This code will be entered into a distributed database, that is, a database that is stored by all market participants.
Next, the entire history of the transfer of rights to the stone will be blockchain-recorded, becoming 100 percent traceable. This guarantee will be provided by the very principle of blockchain — it is impossible to falsify this code because of its full transparency.
Accepting Digital Currency for secured and traceable payments
There are already a growing number of companies operating that accept digital currency as a form of payment from clients for diamond and jewelry purchases. Also, a lot of gem dealers has started to recognize the cryptocurrency as legal tender.
Every time a gemstone, jewelry component or full item of jewelry changes hands from one diamond online retailer to another engagement ring seller, the transfer of ownership or custody is recorded as another block in the chain.
De Beers currently is developing an industry-wide blockchain that will track gems each time they change hands starting from the moment they are first mined. The company has promised that it will be would be open to everyone in the business and would offer the potential for monitoring each stone. It said that it envisions having an unbiased third-party organization manage the project, and it will allow developers to build applications on top of it.
Other companies are also investigating Blockchain systems. They include Alrosa, which is reportedly also investigating a blockchain system with capabilities like those discussed by De Beers, and also the Canadian diamond miner Lucapa.
To keep track of the Diamonds
Blockchain also has also been proposed as means for keeping track of diamonds in the pipeline that is serving as collateral for loans issued by financial institutions to the industry, without having to remove them from the production process. This could provide a solution for the severe lack of bank financing that currently is being experienced by smaller and medium-sized diamond companies.
Last year, international diamond corporation De Beers announced plans for Tracr, the first industry-wide blockchain. Using the Ethereum platform, De Beers developed Tracr alongside Boston Consulting Group’s Digital Ventures and five leading diamond manufacturers.
Each stone is assigned a unique Global Diamond ID, a digital record that contains the stone’s key attributes, such as carat, clarity, and color. They’re logged onto an uneditable digital ledger, with Tracr verifying the data at each step of the supply chain. When a diamond makes it to a store, the retailer can then share this information with the consumer.
Diamond industry giants such as Signet, the world’s largest diamond retailer, and Alrosa, a Russian company that accounts for about 25% of global production, have since joined.
Blockchain, with its ability to replace the services of a third-party reference, allows for the development of independent financial systems. Blockchain has the potential to elevate the diamond industry in these consumers’ eyes.