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How Blockchain is Bringing the Sparkle Back to the Diamond Industry

The global diamond industry has long been one of the most prosperous and controversial in the entire jewelry industry. This is primarily the result of the practices used to mine and trade the gemstones in the first place, resulting in what is commonly called blood diamonds or conflict diamonds. These refer to jewels extracted in parts of the world where militias and anti-government organisations co-opt the diamond industry, taking advantage of slave labor and using profits to finance their violent activities.

Ever since this human rights crisis was first brought to public attention some twenty years ago, the industry at large has tried to improve its regulations and practices, with lab-grown diamonds gaining popularity as a result. Similarly, as more people become aware of the issues, consumer demand has led to jewellers worldwide attempting to find more ethical ways to source the diamonds they sell. This has been an ongoing international campaign, spearheaded by the Kimberley Process which was created in 2003 to “stem…99.8% of the global production of conflict diamonds” through certifying conflict-free gemstones.

However, beyond the Kimberley Process, many companies are turning to technology as a method of keeping the supply chain free of blood diamonds — particularly Blockchain. Here’s how the technology most readily associated with cryptocurrency is doing its bit for the diamond industry.

Using Blockchain to track the diamond supply chain

Blockchain technology has been effective in the evolution of cryptocurrency as a result of its decentralized nature, which gives users the ability to track and log details of their own financial transactions in a public database. The high levels of security offered by Blockchain has been one reason for its popularity in storing sensitive information — hence the popularity of MedicalChain for keeping medical records.

With regards to the diamond industry, Blockchain companies have been working directly with jewellers to ensure that only ethically-sourced diamonds are coming into the supply chain. For example, Everledger has invested in and partnered with Taylor & Hart, collaborating to ensure the ethical sourcing of diamonds by “securely tracking and storing the data [which tracks] diamonds through the supply chain, making that data available to customers and retailers”. This not only improves transparency by keeping a detailed log of how the gems are sourced and sold, but through having all contracts and certification in digital (rather than paper) form within the Blockchain, fraud and interference is prevented.

How does Blockchain work within the diamond industry?

As with any other item sold via Blockchain, every diamond will be given its own ID when a transaction is made. The ledger will also store the color, clarity rating, and carat size and weight, so when the diamond reaches its end point of sale, it can be checked against the Blockchain ID, and make it public for its customer listings.

As Coindesk has noted, Everledger’s application of this tech also uses the ID to provide information related to the diamonds’ sustainability credentials, including live reports of “the carbon footprint arising from their manufacturing processes”. This is then automatically compiled into a report, helping businesses to work out how best to counteract any environmental damage with a “carbon offsetting feature”.

This all serves to encourage transparency in an industry which was not previously known for its open approach. With the Kimberley Process still something of a work in progress, being able to keep a digital record of diamonds’ provenance will not only move to eradicate the number of conflict diamonds within the supply chain, but boost the industry’s wider reputation as a whole

Written By

Ryan Kh is a big data and analytic expert, marketing digital products on Amazon's Envato. He is not just passionate about latest buzz and tech stuff but in fact he's totally into it. Follow Ryan’s daily posts on WordPress / Clear World Finance / Forumsmix

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