Diamonds are widely regarded for their quality. Quality of stone can impact the price more than the size of the stone. For example, in small stones, there is less area that can develop with flaws. The difficulty in finding large, high-quality stones is made apparent by the lack of stones available on the market as well as their price tag.
A diamond of high quality and large size can be priced orders of magnitude higher than smaller stones, for example, this 4.38 carat diamond is priced over $400,000, while a 1 carat diamond of comparable quality is priced at just over $20,000, according to Info-diamond.com.
De Beers, a diamond-focused unit of Anglo American (AAL.L) recently announced that they will be designing a blockchain to secure and decentralize diamond quality records, stone history, and other important documents for diamond quality verification.
According to Reuters,
De Beers aims to launch the first industry-wide blockchain this year to track gems each time they change hands starting from the moment they are dug from the ground
How can diamonds be placed on the blockchain?
Diamonds are documented multiple times before and after being unearthed. They go through stringent quality testing standards, mounting, history of ownership, conditions of extraction, and more.
Blockchain networking enables businesses to publish these records to a decentralized database and prove that their stones have an ideally corruption-proof history. Due to the willingness of individuals to pay substantially more for quality products which have been created, found, or prepared ethically, blockchain makes keeping records far more lucrative than ever before.
Diamond records, quality testing images, and other key features can be stored publicly on the blockchain for later update and reference.
How would diamonds on the blockchain add value to the Diamond Industry?
Placing diamond records on the blockchain enables anyone interested in purchasing a diamond to be matched with their desired parameters (Ethnically obtained, round cut, flawless, etc.) Beyond the potential for order matching, a diamond blockchain strengthens the reputation of diamond vendors by allowing them to prove the origin and condition of a diamond.
This paper trail is one of the most significant drivers behind the value of stones. Without appraisal and documentation, diamonds could, theoretically, be obtained through the worst means possible and sold at a dishonest rate as opposed to their true market value.
Blockchain can reduce the cost of documentation and reference for diamonds, much like the way it reduces the cost of documentation in supply chain. According to Business Insider, IBM and Walmart have run a pilot program which traced the origin of a mango back to the farm. This process took only seconds on the blockchain, but “. . . Would have historically taken days or weeks. . .”