The value and utility of the blockchain, the underlying technology of bitcoin, is coming more and more into focus as blockchain solutions are being developed in a wide range of industries to reduce inefficiencies and to improve the secure storage and transfer of data. As the blockchain is also immutable by design, this technology provides an excellent way of proving the provenance of any asset and strengthening the trust economy.
The Diamond Industry
The global diamond industry is worth an estimated $80 billion. The industry is, however, plagued by issues of unethical business practices and heavy losses due to fraud. The presence of conflict diamonds in the marketplace has long been a problem, especially since the sale of these diamonds support the illegal and often inhumane actions of criminals active in the conflict diamond regions. The diamond industry accepted the government-led diamond certification scheme, known as the Kimberley process, which aims to control the spread of conflict diamonds. However, around 1 percent of the diamonds in circulation still originate from conflict zones.
How Everledger Intends to use the Blockchain to Stop the Spread of Conflict Diamonds
Everledger is a London-based startup that uses blockchain technology as the platform on which it records a range of characteristics of diamonds to ensure that they have not been smuggled out of conflict diamond zones or have otherwise been tampered with on the black market.
“Information on the blockchain is cryptographically proven by a federated consensus, instead of being written by just one person,” says Leanne Kemp who founded Everledger in 2015. Agreement via a distributed ledger makes the information on the ledger trustworthy and irrefutable as the blockchain is immutable.
Everledger uses the traditional features used to describe a diamond such as its serial identification number and the four C’s; cut, clarity, color, and carat weight in conjunction with a host of other features to identify the stone. These features make the identification of the diamond possible even in cases of theft where the serialized ID has been scraped off.
“If you have a five carat diamond, not only do we capture the serial number that’s inscribed on the stone, but most diamonds are described with four C’s (the cut, the clarity, etc.). We take not only those four C’s, we then take the 40 metadata points that make up the diamond. The laboratory houses inspect the stone, and they effectively digitize each of those diamonds. All of the angles and the cuts and the pavilions and all of the crown. And we take all of that, as well as the serial number, as well as the four Cs, and we put all that into the blockchain,” explains Kemp.
Everledger currently has around a million diamonds in its records and is partnering with numerous insurance firms and banks who see the value in this unchangeable identification system. Kemp plans to widen the anti-counterfeiting database for other goods such as wines.
Also, once Everledger has processed several million more diamonds, the core technology will be bolstered further with other technologies, such as computer-driven algorithms. Finally, an expansion from polished diamonds to stones in their uncut form will ensure the further reduction of the presence of conflict diamonds in the global market.
While it will be difficult to end the conflict diamond trade, entirely reducing circulation would not only ensure best practice in a tainted industry, but it would also reduce the harmful effects on the people in the affected regions.