Blockchain Technology Could Be Used to Verify and Track Natural Diamonds
Russian graduates from the National University of Science and Technology and members of the startup Bitcarat.com have commercialised a new technology that can verify and track natural diamonds. Their approach uses blockchain technology. In the case of natural, synthetic, and fake stones exist in the diamond market, their system could keep the financial assets of market participants safe and fully guarantee that a diamond is authentic. Those working on the project intend to introduce a security token offering within one year
Today’s diamond industry is going through global restructuring. The global monopolist on diamond De Beers will begin to produce synthetic diamonds for the first time in 130 years. Element Six, a subsidiary of De Beers, is constructing a $94 million synthetic diamond factory in Portland, Oregon. The factory will generate synthetic diamonds with a total weight of over 500,000 carats.
The reason for this is due to scientific achievements that are pushing for more diamond volumes for potential uses in both jewellery and industry. Today’s synthetic diamonds are almost as good as natural diamonds when it comes to quality and chemical makeup. Thus, gemologists often have trouble distinguishing between a proper synthetic diamond and a natural one. But now that the market for diamonds is growing and there are many possible origins for diamonds, the need to certify authenticity is becoming vital.
Thus, the Russian cryptographs, who are graduates of NUST MISIS and MEI propose a particular system that can trace the origins of natural diamonds. The system tracks the transfer of rights of individual stones, beginning as soon as it is mined. Plus, it is entirely impossible to fake this history.
Alexey Dimitrienko, a founder of the startup and a leading expert of the NUST MISIS Center for Energy Efficiency, explained that they provide a digital blockchain-based certificate for each natural diamond. Blockchain technology will guarantee that the history and authenticity of the diamond are reliable. Plus, it will increase the added value of the diamond as a financial asset.
As each natural diamond is mined, it will be given a special digital code. This code will be entered into a distributed database, which means it is a database that is stored by everyone participating in the market. Then the whole history of the transfer of rights to the stone will be recorded on the blockchain, making it 100% traceable.
It’s impossible to falsify the code due to the full transparency of blockchain. Each attempt to edit the code (or to add a natural diamond onto the blockchain) is permanent and alters the whole chain. Therefore, this automatically shows any attempt at fraud.
Many of the world’s biggest diamond manufacturers have expressed interest in using blockchain technology and digital certificate. They are also interested in the idea of a digital diamond exchange with a diamond token.
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