Diamonds are known as one of the most precious stones on earth. However, investment demand for diamonds is still less than 5%, owing to various factors that doesn’t encourage investors to put their money into diamonds. Blockchain technology is helping practice a fair and transparent way to trade diamonds.
Diamonds lack standardization, each diamond is unique and one carat of diamond is not equal to another carat, unlike gold or silver which are measured in gram and one gram is equal to the other. Non-fungibility of diamond is compounded with diamond markets not being transparent. For a common man, who isn’t an expert in diamonds, it is difficult to determine the true value of a diamond. Liquidity is another factor that is absent in diamonds. They are generally sold to end customers in a one-sided transaction. However, when the customer wants to resell the stone, they don’t get a fair price and usually have to bare a loss of roughly 30 – 50%.
Catering to all these factors that make diamond an insignificant commodity to invest, CEDEX (CErtified Blockchain based Diamond EXchange) has come up with a new online diamond exchange. It would connect main diamond supply sources – dealers and private holders to general investors and cryptocurrency holders.
DEX – a proprietary machine-learning algorithm compromises of three elements – gem composite, which represents a diamond’s gemological perfection in percentage terms. Second being the parallel composite, this indicates the rarity of a diamond category and available quantity in the relevant category. The third element is indices composite; this gives investors market directions for the diamond industry. This algorithm developed by CEDEX will enable even inexperienced people to securely trade diamonds.
The decentralized exchange platform runs on CEDEX coin, which is an ERC-20 compatible token that will be traded on Ethereum blockchain. This will allow easy transfer of capital to the users between diamonds, cryptocurrencies and fiat currencies.
Users can access the beta version of DEX on the CEDEX site. It currently has 0.3 – 0.5 and 1 carat round diamonds available and have already reached 35 – 40% of targets. It has a goal to price any certified diamond at the accuracy rate of more than 99.5%. It has planned to launch a crowdsale on January 12, 2018 and intends to fully begin operations in the beginning of Q3 2018.
Meanwhile De Beers, the world’s largest rough diamond producer by value announced its investment in a blockchain based platform as an effort to remove conflict diamonds from the market and to enable greater tracking and transparency of the stones.
“Consumers should be able to know there is an accurate register of a diamond’s journey that provides assurance of its provenance and authenticity,” said De Beers chief executive Bruce Cleaver.
In June 2017, Singapore Diamond Investment Exchange (SDiX) launched the trail of a blockchain-based authentication and record-keeping service for trading diamonds on a global level. The service was launched with an aim to enable a trusted, fair and transparent market place for trading diamonds as an investable asset.