The Application of Blockchain Technology in Diamond and Gold Industry

Diamonds represent beauty, love and luxury. That diamond ring you gifted your spouse on your anniversary. Do you know about its origin? There are very high chances that you don’t. But you should understand that it is very crucial to know the origin and history of the precious gemstones such as diamond.

Because in the market, many unethical companies mine conflict or blood diamonds. Blood diamonds are the diamonds that are mined in war zone and are used to finance violence. Then there are counterfeiters too, who introduce fake diamonds into the system. Besides, there are mines where child labor prevails and abuse of human rights is on rise. Therefore it becomes vital to ensure that the diamond you are buying is authentic and conflict free.

Read more : Reason why Supply Chain needs blockchain

In the current scenario, the jewelry industry relies on certificates to prove that the gem is not counterfeit, or sourced from conflict zones. But this process is cumbersome and paper records are not always authentic. Diamond industry is one of the first industries to embrace blockchain technology to verify the authenticity of the gemstones. A company named Everledger has been tracking diamonds since 2015 and has already tracked provenance of more than 2 million stones.

Now let’s understand how Blockchain can facilitate tracking of the journey of a gemstone and establishing its authenticity. All the stakeholders involved in the diamond industry and supply chain will have to go through KYC verification and all the relevant documents will be stored on the blockchain. The stakeholders need to register the information about diamond at each and every stage. The first step in the diamond industry is mining of the the diamond.

In a blockchain system, the first step will be to register the mining location of the diamond on the blockchain. Other critical informations like mining was not done in conflict areas, there were no forced or child labor and there was no violation of human rights during mining, will also be registered on the blockchain platform along with the their respective proofs. After mining, the rough diamond is individually checked and evaluated on the basis of its size colour, carat etc..

In this step, the certificates will be added on the blockchain describing the attributes of the gem and a unique identification number will be given to diamond. In the next step, the diamond is given a 3 dimensional view and polished. For this step as well, the relevant information will be stored on the blockchain. Later the diamond is cut by laser. Every piece of diamond cut from the parent diamond will be given a sub unique identification no and then polished. This information will also be stored on the blockchain network. Further the diamond is given grades after checking its quality using high magnification instruments.

In the blockchain based system, all of these certificates will then be stored on the blockchain. Thus each transfer and process will be registered on the blockchain until the diamond is sold to the consumer, therefore with Blockchain technology a permanent and immutable record of the journey of a diamond can be created. Finally, a customer can easily verify the provenance and authenticity of the diamond by simply scanning the unique identification number present on the diamond. Like diamonds, blockchain can also be used to track the authenticity of gold and other precious gems. Thus whole journey and provenance of these metals can be known.

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