Blockchain to Play Vital Role in Diamond Industry
How sure are you about the diamond you are going to buy was actually mined in a conflict-free zone? How confident are you that pill you are going to take contains the medication specified on the pillbox label? That the food you just purchased was properly refrigerated when transported to your grocer?
Every time, we need to believe the retailers we deal with to tell us the truth about the product we buy, and they must trust their suppliers and so on. This trap of trust is many times defective, subject to fraud, error, and mismanagement.
It doesn't need to be like this. Bitcoin and different cryptocurrencies use blockchain technology to give the trust expected to parties who don't know each other to securely execute business, for example securely allowing the transfer of million dollars in a single transaction. Blockchains guarantee that the trust you place in the provenance of products—where they originated is well-founded.
What does blockchain have to do with your diamond?
Prior to 2000, a diamond's way from the mine to a retail deal was not closely tracked. In 2000, the United Nations set up the Kimberley Process "forces extensive requirement on its members to enable them to certify shipments of raw diamonds as 'conflict-free' and avoid conflict diamonds from entering the legitimate exchange."
Diamonds still a problem today. Document altering, fake cases, synthetic stones that are falsely identified, and double financing are difficult to trace. There is an urgent requirement for a single point of truth so that all parties on the supply chain, from makers to cutters to investors and insurance providers, have shared access to records documenting diamond's mining, assembling, and sale.
Stages of Diamond Processing
Diamond experience a multistage process between the mine and the jewelry store.
Mining – More than 69 million carats of raw diamonds were mined in 2016, basically from mines in southern African nations, Russia, and Canada.
Sorting and Pricing – Rough diamonds are arranged into more than 5,000 classifications. Just about 20% of all rough diamonds are of gem quality, while 80% of the diamonds dug are sold for industrial purposes. Diamonds are valued and offered to makers at one of ten yearly markets, called sights.
Assembling – Gem-quality stones are bought by cutting centers. There, the rough stones experience a 3-D scan to make a PC model. Specialists analyze each rough stone concerning its size, shape, and the amount and position of its inward structure and flaws, and update the PC model. Then, they conclude how to cut the stone to create the greatest value.
Turning into a Gem – The stone is then stamped and divided or sawed with a jewel saw or laser. A few diamond cutters, each with their own specialty, help produce the gem. Polishing additionally is a multistage procedure, with various specialists polishing the fundamental features of the gem and others polishing the final aspects. The last step is quality control to check the gem's attributes and guarantee that it satisfies the maker's guidelines. It may be recorded by laser with an ID number.
The Sale – The finished diamond will be offered to jewelry manufacturers and wholesalers. They, in turn, offer the gem to customers, or to retail diamond sellers and jewelry outlets.
Putting Diamonds on the Blockchain
With the objective of bringing transparency to the diamond market, blockchain technology can be utilized. Additionally, with the help of software to interface with the scanning, modeling & cutting equipment utilized in gem manufacturing so that these instruments could automatically store & generate the data related to the manufacturing process on the blockchain.
Roughly mined diamond's data can be stored on the blockchain. At each phase in the manufacturing process, users can enter information, for example, the time and date of the procedure and the name of the craftsman performing it. Retailers can enter data about any jewelry piece containing the diamond, for example, store area and warranty details. Clients can see the whole provenance just by signing in with their credentials.
Keeping Fraudulent Away
The weak part of any technological system is human intervention. Most of the time, blockchain overcomes this weakness by utilizing digital signatures. For example, when a certified mine puts a diamond on the blockchain, it signs the transaction with its private key. The signature can be checked by anyone utilizing mine's public key. This implies the mining organization cannot later deny that it was the source of the diamond. Similarly, a rogue company cannot put a diamond on blockchain claiming that to be a certified organization because a rogue organization's signature will be seen quickly as being invalid.
The blockchain, combined with digital signatures and machine-to-blockchain software, gives a method for safely recording the provenance of diamonds and different products. Customers can easily check the movement of a product recorded on the chain from its source to the present. This transparency increases the value of the product at each point in the supply chain and in its possible purchase by the customer.