Blockchain technology has thus far been the most significant development to spring from the global cryptocurrency craze. Although it was originally designed to power Bitcoin and other cryptocurrencies, people and companies around the world are currently finding new and innovative ways to use it.
So far, the blockchain has turned up in industries ranging from financial services to healthcare and everything in between. There have also been a number of industries making use of the blockchain that you might not expect – one surprising one if the diamond industry.
Here's how one of the world's oldest industries is making use of some of the world's most cutting-edge technology to solve some serious long-standing issues:
The stain of blood diamonds
One of the most glaring issues that the global diamond trade has suffered for decades is the prevalence of blood diamonds. These are diamonds that are illegally mined in third world countries, typically in Africa, and then sold on the black market. The profits from the illicit sales are then used by despots, guerrilla armies, and warlords that wage bloody and brutal civil wars within their native countries.
Countries such as Angola, Sierra Leone, The Congo, The Ivory Coast, The Central African Republic, and many others have suffered from the conflict diamond curse. After years of internal strife and civil wars in the region, largely funded by the sale of blood diamonds, the UN finally took notice and began to vociferously urge the nations and corporations involved to find a solution.
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An opaque solution
The result of the UN's pressure was the Kimberley Process, an agreement between diamond-producing nations and industry representatives that sought to standardize the tracking and authentication of diamonds as they moved from diamond mines and onto the open market. Unfortunately, there's plenty of evidence that the scheme hasn't worked as well as intended.
The major flaw in the Kimberley Process is that it doesn't certify individual diamonds as conflict-free. Under the existing scheme, batches of diamonds are certified conflict-free prior to being polished and cut. That means that the ability to identify diamonds from problematic sources ends long before the stones themselves enter the global market – leaving the system vulnerable to corruption, smuggling, and outright evasion.
Tracking diamonds with blockchain technology
The only foolproof way to end the global trade of blood diamonds is to employ a system that allows full, transparent, end-to-end tracking of diamonds from mines all the way to the retailers that sell them to consumers. To avoid the rampant fraud and abuse that's inherent in the existing Kimberley Process, an unassailable record of transactions for every individual diamond must be maintained. That's where the blockchain comes in.
Beginning in 2015, blockchain startup Everledger began registering diamonds on their custom-built blockchain ledger, using more than 40 characteristics like clarity and color to verify the authenticity of each stone. By leveraging the trustless and immutable nature of the blockchain in this way, it is now possible to keep a fraud-proof transaction record that can follow each diamond as it makes its way through the supply chain. At last report, Everledger claims to have over a million unique diamonds registered in their proprietary system.
The industry moves towards blockchain
In a sign that the diamond industry itself is beginning to see the value of a blockchain-based diamond registry, industry giant De Beers recently announced plans to create their own blockchain-based authentication system that they home to deploy at all levels of their diamond production processes. The system, called Tracr, works in much the same way as the Everledger blockchain but has one significant advantage.
De Beers, with its unique knowledge of existing industry protocols and verification systems, has designed Tracr to function as a bolt-on service to existing industry grading and tracing programs. As such, it should have the ability to import a wealth of existing data about each diamond, reducing the administrative burden on companies that buy-in to the program.
A brilliant future
Only time will tell if the blockchain solutions working their way into the diamond industry will solve the vexing problem of blood diamonds once and for all. So far, the results being reported by Everledger and Tracr, seem promising. If they are ultimately successful, they will have solved a problem that has been a black eye for an industry that prides itself on an image of beauty and luxury. Once a diamond is entered into the blockchain ledger, the industry can once again claim - with real certainty – that a diamond really is forever.