Blockchain Is More Than Simply A Record Keeper Of Transactions In The Diamond Industry

Blockchain Is More Than Simply A Record Keeper Of Transactions In The Diamond Industry

A diamond, unarguably, is one of the most valuable objects that can be invested in or purchased. The diamond industry itself is centuries and spans across the globe – it could be mined in Africa or Australia, then travel to Belgium, India, or Israel for cutting and polishing, and then get distributed across the globe to retailers. This makes up just a part of the complex network that holds up the diamond business world. To get an idea of what is hinted at here, put into the mix manufacturers of equipment required to process the diamonds, certifiers, jewelers, auction houses, lawyers, and multiple other intermediaries.

Diamonds are available loose and also as encrusted in precious jewelry. Given the massive scale of the supply chain, this opens up numerous scopes of misplacement and fraud. This conundrum can be solved to a great extent by implementing the distributed ledger technology also known as blockchain to manage the supply chain and value chain system.

This idea may come as a surprise to many who have till now associated blockchain with Bitcoin, and known its application to keep a record of money transactions made online using cryptocurrency. The truth is that blockchain has evolved significantly in the past couple of years, and tech visionaries have explored other uses of the innovation and arrived at several new applications.  

One of the primary purposes blockchain has served is in the management of the supply chain, facilitating reliable provenance tracking. The demand for diamonds in the global market had taken a hit when the circulation of blood diamonds procured from conflict zones came to light. These diamonds are extracted at the cost of human rights and fund civil wars and other crimes. Diamonds that are not mined in the conflict zones too can contribute to the proliferation of crime, as the gemstones are known to be used as currency for underworld transactions. The new age hyper-aware consumers now look for certifications and hallmarks before investing in diamonds. With access to a shared blockchain, a consumer can verify the history of a diamond himself since the immutable digital ledger will have a record of every stage of the diamond’s journey from the mine to the store. Such a database will reveal information regarding the site of excavation, cutting, polishing, certification, previous owners, and retail store, among others.  

The injection of lab-grown diamonds is another factor that has made the verification of the provenance of diamonds necessary. This is because even though lab-grown diamonds have an identical molecular structure as that of naturally occurring diamonds, they are not as expensive or rare. Along with lab diamonds, artificial diamonds too can be confused with naturally occurring diamonds and can be distinguished by professional jewelers. One can avoid paying too much for a stone that is definitely not worth that much by tracing its movement through blockchain-based value chain management system, removing consumer’s mistrust that adversely affects the industry.

Data relating to the quality of a diamond can be archived in a blockchain. For example, details about the quality like cut, clarity, color, certification, and authenticity reports could be found here. Blockchain diamond consortia present an opportunity for its network members to avail these benefits easily and optimize their trade opportunities. This idea is swiftly making its way to the forefront of the diamond industry. The members of the Diamante Blockchain Consortium would be able to access such information to optimize their trade opportunities.

The decentralized and immutable nature of Blockchain makes it well suited for organizing and speedily accessing asset and transaction-related specifics. Each of these details is assigned its own digital security key or “hash” that distinguishes between data. These are then stored in blocks and secured with timestamps and is accessible by any authorized node or computer that of the Blockchain Network.

Storing data related to diamonds on Blockchain guarantees a transparent and agile system that facilitates fast retrieval of data. Blockchain technology, in this industry at least, has come a long way.

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