Singapore Diamond Investment Exchange (SDiX) has partnered with Kynetix and Everledger to trail its first part of a Proof-Of-Concept of a blockchain-based authentication and record-keeping services for trading diamonds on a global level.
Kynetix is a blockchain-powered commodity marketplaces development company and Everledger uses this technology to track diamonds.
Linus Koh, CEO of the Singapore Diamond Investment Exchange, said, “This exciting collaboration builds on SDiX’s record of delivering advanced technologies to enable a trusted, fair and transparent marketplace for trading diamonds as an investable asset class. This new concept draws on blockchain’s distributed ledger capability to demonstrate how we can further instill confidence and convenience for the benefit of diamond investors and financiers.”
This concept would allow holders of diamonds to authenticate the certificates and ownership of the diamond bought from a third-party verification laboratory. They would be able to do this using a distributed ledger. The ledger will be updated whenever there is a change in the ownership of the diamond on SDiX, thus creating a digital record for market participants.
In a trail, the blockchain mechanism authenticated the details of a consigned diamond basket, which consisted of certified stones on SDiX. It used data points that were hosted online. One of the major parts of this output is a ‘view receipt’ of the digital certificates of each stone in the basket, stored on the blockchain.
In future, this approach opens up a plethora of application for diamond market participation. They include, enhanced provenance data, increased supply chain security and efficiencies, and new risk management tools.
This blockchain mechanism is supposed to help the industry to clean up its illegal acts attached with blood diamonds. It attempts to stop illegal diamonds move through the main exchanges and thus makes it harder for the criminals to profit from them. But, unless all the players in the diamond industry adopt this system, there will be loopholes. This system aims at removing the risk of people making forged certificates and entering them into the diamond ownership chain.
Moreover, to bring transparencies in the trading of diamonds, Singapore Diamond Exchange came up with world’s first fully electronic spot commodity exchange for diamonds in mid-2015. The platform is capable of handling 500,000 transactions per second and holds a database of diamond inventory, graded by GIA and having Kimberly Process certificates.