Diamonds have had some bad publicity over the decades, with proceeds from the illegal trade in “Blood Diamonds” perpetuating conflicts in East African countries such as Sierra Leone and Liberia. The 2006 movie, Blood Diamonds, starring Leonardo DiCaprio, shows the misery the illegal diamond trade inflicts on populations.
Furthermore, as technology advances, more cases of fraudulent lab-grown diamonds being certified as real diamonds are coming to light.
Take, for instance, a case from 2021 where a 6.18ct round brilliant-cut, loose stone, previously graded as a ‘real diamond’ by the Gemstone Institute of America, was found to be lab-grown. The fraud came to light after the International Gemstone Institute was asked to double verify the diamond.
How can the blockchain and NFTs help fight diamond fraud?
The world’s largest diamond company, De Beers, already uses blockchain technology. In May 2022, the company launched its Tracr platform which supervisesthe production and dispensation of its diamonds.
All transactions on the platform are immutable and cut out the threat of certification fraud and data manipulation.
Moreover, a report by Bain and Company found that consumers are more discerning when purchasing diamond jewelry. This social consumerism considers the social and environmental impacts, conflict-free supply chains, and carbon footprint produced by production.
With all information relating to each diamond recorded on the blockchain, consumers can view the diamond’s history before deciding to purchase.
Non-fungible tokens can also play a part in a workable solution to diamond certification fraud.
We can see from the 2021 lab-grown case that diamonds can be graded multiple times, and the purchaser may not receive all associated reports. With the diamond recorded as an NFT on a public blockchain, there can be no exploitation of the records.
Mike Moldawsky, CEO of Diamond Dawn, speaking to Cointelegraph, stated,
“Having a diamond certificate as an NFT on the Ethereum blockchain can ensure immutability, proof-of-ownership, and visibility for both retailers and consumers,”
Afterthoughts
Blockchain and NFTs will continue to make inroads into all industries, whether it is to help with supply chains or the authentication of products. The diamond industry is one sector that could see the inclusion of these new technologies reap real benefits, and repair its tarnished reputation in the eyes of the public.
Other industries using NFTs and blockchain include the alcohol and travel industries.
