Diamonds are entering the new tech savvy era. So where do diamonds and technology meet? The diamond industry has long faced problems with reporting the origins of a diamond, and authenticating its ID and grading. Traditionally documented on paper, it has at times been difficult to trace the diamond’s true origins and providence. The new blockchain technology is slowly making its way into the diamond industry to help solve this issue.
Blockchain technology uses cryptography in order to keep secure and accurate records of every transaction that occurs through any process of an event on any network. Once a transaction occurs, it gets added to the history and cannot be removed or edited, without multiple checks. This technology is currently used most prominently in Bitcoin currency.
Blockchain Technology: Updating the Records
Although it may be a new concept to many, diamonds and technology actually mix quite well. Blockchain technology will help to reduce industry fraud, as well as to put a stop to concerns over blood diamonds. By creating transparency in the industry through easy access to all documentation, secure history of events, real-time updating and multi-source approval on updates or changes, fraud can eventually be obliterated. This news should be cause for celebration in the industry. A 2012 study from the Association of British Insurers shows that nearly 65% of fraudulent claims go undetected, costing insurance companies two billion pounds annually. A large portion of this amount comes from the diamond industry. Everledger, the company leading the blockchain technology movement, believes that creating a digital fingerprint that documents the trail of ownership, including all processes the diamond has undergone during its lifespan, will revolutionize the entire industry.
The Potential Outlook
Obviously the process is not simple. It requires getting all the players along the diamond pipeline, from manufacturers and traders, to gem labs, retailers and insurers, to adopt the concept and practice of blockchain technology. But once accomplished, the potential is unlimited. Aside from helping in the fight to quash the blood diamond business, it can also prevent diamonds from being sold for heavily inflated prices at a later point in time. This is due to the fact that blockchain technology has documented the entire diamond history, including the 4Cs, and perhaps even the diamond story. Blockchain technology will capture the diamonds origins, every owner of the diamond over the course of its history, its inscribed serial number, the cut, clarity, color and carat ratings, and also, the diamond’s 40 metadata points, including the angles, cuts, pavilions and more.
In addition, online retailers like eBay and Amazon would be able to vet the inventory sold on their sites, as would, eventually, consumers. And the vintage diamond market could benefit from the digital fingerprint made through the use of blockchain technology, due to the fact that the entire life history of a diamond would be readily available.
Diamond Investment: The Financial Aspect
On a different note, thanks to a turbulent financial economy, regular investments are often failing to make investors any money, and accounts are earning little, if any, interest at all. Therefore, investors are looking into alternatives in order to earn money. Many are investing more and more in diamonds. These investors don’t look at diamonds as a jewel, but merely as a way to earn money, as a secure asset with a resale value above what they would earn with a regular investment. The rise of the diamond fund, which allows investors to pool their resources into the purchase of a larger diamond, so that they won a portion of the diamond as an investment, has become immensely popular.
Often brick and mortar retailers view technology as an intrusion into their business, creating a new and difficult arena for them to understand and work with. However, with blockchain technology and diamond funds as a new source of profit in the diamond industry, technology is currently proving that it could well be a diamond’s new best friend.