- Leaving aside Bitcoins,
the diamond industry has become an early
and enthusiastic adopter of the blockchain technology.
Let's see why.
The industry has been plagued by two problems.
One, blood or conflict diamonds mined in war zones
and sold to finance warlords and their armies.
Two, synthetic diamonds passed on as natural ones.
Consumers are increasingly unwilling to buy such diamonds.
As a result, companies which can prove that their diamonds
are free from these problems
can enjoy a competitive advantage.
In 2003, the United Nations General Assembly
established the Kimberley Process Certification Scheme,
KPCS, to increase transparency
by tracking the movement of diamonds
and keep conflict diamonds out of the market.
The KPCS mechanism required participants
to monitor shipments of rough diamonds
and certify them as conflict-free.
Unfortunately, the KPCS mechanism proved to be a failure.
It relied on self-regulation and self-certification.
According to many observers, instead of solving the problem
it degenerated into a tool for forced accreditation schemes.
There was no way to verify
the stated provenance of any diamond.
To solve the endemic problem,
in May 2015 Leanne Kemp, an Australian entrepreneur,
pioneered Everledger, a global digital registry for diamonds
powered by an IBM blockchain platform.
Kemp's insight?
Blockchain can create an immutable ledger
to record the entire history of a particular diamond
and eliminate the possibility of document forging.
Over time, many of the major players
in the diamond industry,
including miners such as the Russian company Alrosa
and Hong Kong-based retailer Chow Tai Fook,
have joined the Everledger project.
Chow Tai Fook also created the T MARK line,
in which the diamonds are inscribed with traceable codes
so that their origin could be checked.
Everledger is not the only blockchain platform
in the diamond industry.
In January 2018, De Beers Group,
one of the industry's biggest players,
launched a tracker with the stated goal
of improving the transparency of the diamond value chain
by creating permanent digital records
for every diamond registered on the platform.
Other blockchain-based platforms to track diamonds
continue to emerge.
Over the past year,
Russia's Ministry of Education and Science
launched its own blockchain solution
for responsible diamond trade.
A similar platform called Clara has emerged from Canada.
It's clear that the blockchain technology
is now becoming an integral part of the diamond industry.