The gem and jewelry industry is one of the oldest globally, and diamonds are probably the most coveted precious stones in the market. However, the sector has been mainly run on not-very-transparent traditional ways and sustained by backroom handshakes. Marked by minimal documentation, these two traits have presented diamonds as a favored vehicle for financing crime and laundering money. Diamante – a global diamond consortium powered by blockchain technology –is ready to launch their native asset, DIAM, to bring trade-in diamonds one step closer to encrypted digitization to mitigate some of the challenges afflicting the diamond industry.
The process of producing a diamond – be it gem-quality or the sort suited more to industrial purposes – sees the rough stone extensively travel from one part of the planet to another, with multiple stops in between. It could be sourced in Canada, Australia, Russia, Botswana and South Africa, stop to be cut and polished in India, Israel and China, set in jewelry in Hong Kong and the USA, and finally be sold all over the world to contribute to a market worth 80 billion dollars. The trade-in diamond is, in a nutshell, global.
This brings into the equation a voluminous change of hands in currency, documentation, verification, and money transfers through traditional institutions. Together, the process could span days, costing investors millions of dollars.
Transferring the operations such as tracking the gems’ movement on a supply chain, keeping a tab on the exchange of documents and verifications of transactions on a decentralized, immutable digital ledger would provide the industry with reliability and accountability, which is till now lacking. The Diamante Blockchain network sees participation from different diamond sectors – including mining companies, manufacturers, retailers, and end customers.
Since it is not easy to convince traditionally conservative players to adopt new technology, the switch is incentivized. Participants of the diamond consortium will be able to purchase and trade with DIAM, create and list their own crypto coins on Diamante’s global cryptocurrency exchange, and therefore enhance the profitability of their involvement in the diamond industry. The very practice of trading in cryptocurrency brings new energy into the market while visibly reducing the opaqueness attached to it.
Employing cryptocurrency also circumvents the tedious and time-consuming process of dealing with the standard mode of payment through multiple stages of processing and regulations in banks. Diamond consortiums like Diamante attract investors because payments made on a blockchain network using cryptocurrency are much quicker. Because of the elimination of intermediaries and agents, low on cost.
Although there is much to hope for regulation in the realm of cryptocurrency, the traders at Diamante are given a digital wallet and listed after thorough due diligence and stringent vetting. This covers KYC stages, verification of adherence to AML laws, and the Kimberly Process.
The diamond industry is fraught with challenges, and the introduction of a decentralized, immutable, easy to access blockchain ledger can address most of them. Simultaneously, cryptocurrency and its trade on exchanges such as the one provided by Diamante invigorate the diamond market, bringing in more investment without having to buy and sell diamonds themselves.