In a previous article, we discussed the De Beer’s new blockchain programme aimed at providing clarity to a diamond’s journey, and ensuring its ethical provenance. It is undoubtedly every jeweller’s worse nightmare, the inability to provide a solid source for any given diamond.
The provenance is not the only problem however. Diamonds are renowned for their lack of standardisation. Unlike gold, where every gram is equal to another gram, diamonds have differed cuts, clarity, grades and colours which distinguish them from each other. Two gems which look the same to the naked eye, may belong to two opposing categories.
De Beers‘ program called Tracr aims to create a blockchain, synchronized database which helps jewellers, dealers and collectors ensure whether a particular diamond is real or fake. As the name implies, the program is built to record this information, making it available for anyone who wished to verify the diamond. Although still in its infancy, momentum is growing.
What started out in 2009 as a ledger for cryptocurrency Bitcoin, is now a fully-fledged global program, used in industries ranging from education to real estate and finance. While the trading of Bitcoin is not news, this move from jewellery giants to record the trade and movements of diamonds on the ledger is certainly an unconventional one. This time, it’s Chow Tai Fook’s turn.
With assets worth 8 billion dollars and 2,200 stores around the world, Chow Tai Fook is not a small fish. This is also not the Asian heavyweight’s first time testing the blockchain system. Back in September, through IBM-secured Everledger, Chow Tai Fook developed a similar project. It is not currently known whether the Hong-Kong based jeweller gave up on this project or whether it is simply testing De Beers’. Theoretically it would extend the platform’s footprint into the Asian market, the biggest in terms of diamond production.
Managing Director Kent Wong, referred to the importance of traceability. As previously stated, Tracr would assigns a unique ID to each diamond which records characteristics such as colour, weight and clarity.
“We believe that our participation in Tracr will help ensure we are at the forefront of this important issue,” Wong said.
De Beers was not alone in the venture from the start. A number of companies joined the pilot project in what can be described as an unprecedented move for the diamond industry for years. Diamond jewelers wish the message of transparency to come across strongly to the end consumer. Unlike gold, diamonds are hard to value. Unless one is equipped with the right tools, knowledge and network, the origin of the diamond is easily lost.
Signet, the world’s largest diamond retailer was the first to join De Beers’ program, and Russia’s Alrosa, incidentally De Beers’ main competitor, is also testing Tracr.
The move does not come without its critics blowing on their trumpets. Many see this as a plot to keep prices artificially inflated. Others warn that this testing for source will not come without its price, as laboratories can now include an extra fee for source testing as each individual diamond is scrutinized for its origin.
As already highlighted before, this program is still in its baby steps. Nothing has been finalized or formalized and the program creators are still testing strategies to make sure the right verification method is utilized. However, if it is successful, it will revolutionise the diamond industry and hopefully make investing in diamonds a safer and more risk-free venture.