Rapaport Magazine

Blockchain blockbusters

As more customers demand to know the provenance of their diamonds, companies have developed an array of traceability programs.

By Adina-Laura Achim

Image: Everledger

The rise of a new generation of conscious consumers has pushed the diamond industry to pursue new models of ethical sourcing. As such, technologies have emerged to offer an extra layer of security and transparency to all parties.

Against this backdrop, some platforms and systems stand out. De Beers diamond traceability platform Tracr provides a permanent, digital, immutable trail for diamonds as they travel through the value chain. So far, Tracr has registered 600,000 rough diamonds worth around $3 billion from De Beers production, according to Wesley Tucker, head of digital transformation at De Beers Group.

Tracr combines several technologies, including blockchain, artificial intelligence, and the Internet of Things to create a tamper-proof, secure ID for each diamond. In essence, this ID amounts to “an unchangeable digital ‘handshake,’” Tucker says, adding that Tracr has “the ability to verify this ‘handshake’ while also protecting the data of participants.”

At the same time, De Beers continues with the preparatory steps to fully launch its Code of Origin provenance program, which will guarantee “that diamonds discovered by De Beers are natural, conflict-free and have made a positive impact for people and the planet on their journey to the consumer,” Tucker states. Tracr will play an important role in delivering Code of Origin.

Etched in stone

De Beers is not the only industry player looking into innovative engraving methods to guarantee a diamond’s identity. UK-based diamond-security company Opsydia, for instance, uses subsurface laser technology to place microscopic identifying features beneath a stone’s surface. These Nano ID features are permanent, so one cannot remove them or polish them away without recutting the diamonds. Parties throughout the pipeline can identify a stone by comparing the engraved details to the number on the diamond’s grading report or blockchain record. More importantly, the Nano ID is undetectable to standard grading microscopes and therefore does not affect the clarity grade of a diamond, even for internally flawless stones.

“The Opsydia D5000 and D6000 systems can be integrated with other technologies in a grading and/or manufacturing environment, meaning a blockchain ledger for a specific stone can be updated with the date and time that it was processed, alongside a photograph of the Nano ID feature placed beneath its surface,” says Opsydia CEO Andrew Rimmer. “This closes a significant loophole in current blockchain technology and enforces the validity and trustworthiness of the process as the diamond industry advances digitally.”

Technology startup Everledger, meanwhile, has partnered with online diamond-trading platform IDEX to track and authenticate its diamonds throughout their entire journey. In the US market, major brands such as Brilliant Earth, Fred Meyer, and Green Lake Jewelers have already taken advantage of the company’s blockchain solutions.

Coining a new phase

Another industry innovator is US-based technology startup Diamond Standard, which has created the world’s first and only regulated diamond commodity: a transparent physical coin containing diamonds that serves as a token for transactions on a blockchain. Already, 150 of the largest industry sightholders and dealers are members of the Diamond Standard Exchange, according to company founder and CEO Cormac Kinney.

“To prove that every coin is equivalent, we record all of the diamond information on a public blockchain. Anyone can verify any coin at diamondstandard.co,” says Kinney. “They will see the Gemological Institute of America (GIA) and International Gemological Institute (IGI) certs for every diamond, and proof that they were sourced transparently through an exchange under regulatory supervision.”

Access restricted?

Despite triumphs, the industry is also facing some serious setbacks. As Kinney points out, “blockchain technology is terribly expensive,” so until the technology becomes more affordable, some suppliers and retailers will be excluded. Industry leaders also need to overcome consumer skepticism, as older diamond buyers might not trust the technology or the process.

“The only disadvantage of blockchain in the diamond industry is that it is still broadly misunderstood by the masses,” asserts Leanne Kemp, founder and CEO of Everledger. However, she adds, “as more people adopt blockchain, the more it becomes the standard to follow.”

Article from the Rapaport Magazine - March 2022. To subscribe click here.

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