Every field of business evolves when it overcomes the problems caused by loopholes in the system. Technology helps in the evolution and makes the system stronger. One such apparent loophole in the diamond industry is the difficulty in maintaining a record of the source of diamonds and keeping track of the supply chain. Now, with the introduction of blockchain technology, this is worked upon to be solved and can prove to be a boon to the Diamond Industry. Blockchain technology is information stored at each stage, but let's understand how it works and how it can help the diamond industry all over the world.
Blockchain technology is a system of updated and digitalized databases, it stores data as an encrypted block in the form of a digital ledger. Each block of information is connected to another in chronological order and forms a chain. This advanced tool is said to have the capability to identify the origin of any product. One can also trace its source all the way to the destination path. Blockchains were originally developed as an accounting method for the exchange of cryptocurrencies like Bitcoin.
The most important factor of blockchain technology, however, is the security of data.
The data stored in blockchain technology does not provide anyone with access to edit, and hence the entered data is uneditable for other users to avoid exploitations. It uses the digital signature for authentication at every stage and for every transaction. And once the data is verified by authentication, it becomes a block of data. It keeps track of all transactions and records with an irreversible cryptographic key signature for each one. The data Cannot be edited at any stage. It is a decentralised system that is transparent, permanent, virtually unalterable, and incorruptible.
Blockchain can contribute to improving the transparency and authenticity of diamonds. Traders can use it to validate the origin of every diamond, seal the source of payments and protect the supply chain from illegitimate trading. The use of blockchain technology can ensure that each stone conforms to all standards and is sourced from a trustworthy and ethical source. Each diamond can be tracked from mines to retailers at every stage by this technology.
The Industry can also use it to improve the supply chain by uploading the transactions on shared ledgers. Every trader will know how much time is taken in each process at every stage before it reaches the customer. The shortage and abundance of metal or diamonds can be recorded and can be dealt with efficiently at all levels. Stock at each level can be managed by using data blocks.
The customers are now getting considerate about what they buy and where it comes from, they want to know If the products are sustainable or ethically sourced. The same goes for the customers of the diamonds and jewelry industry. They will even pay extra for diamonds when the information like where the diamond comes from, where it was processed, and by whom is provided. Because buying something unethical makes them feel like being a part of it.
A group of leading diamond and jewelry companies from around the world announced a unique blockchain collaboration called TrustChain. This will enable them to track and authenticate diamonds, precious metals, and jewelry at all stages of the global supply chain, from the mine to the retailer.
"Consumers should be able to see the journey their gem has gone through. Soon ring owners will be able to look up their rings [on the same blockchain],” said Senior Vice President of Industry Platforms, Bridget Van Kralingen in an interview.
Traditionally, traders were dependent on certificates to prove the authenticity of diamonds, this process was manual and also prone to mistakes. Blockchain technology can be a huge help here by creating unalterable records of diamonds at each stage which are kept transparent and accessible to all to avoid any sort of exploitation.
With blockchain, every diamond can be assigned a unique Global Diamond ID. This digital ID includes several features like clarity, carat, and colour. It helps stakeholders to make decisions by analysing this type of data and several other pieces of information. This is a very important and beneficial need of the diamond industry.
The Laxmi Diamond group has its own software for tracing their manufacturing process and inventory management. They have been doing this since way before blockchain technology came into existence. They don't specifically need blockchain for the purpose of tracking, but to keep up with the trend where every customer wants to know from which mine the stone comes, who works on it and who sells it. They are open and enthusiastic about exploring it. Currently, There are some programs like Tracer and Everledger who have initiated and have given a platform to maintain such kinds of records in the diamond industry. The LD group is looking forward to enroll in one such program real soon, because from the mines to the end consumer, everyone wants to have an insight into the traceability of the stones they are dealing with.
Many studies and much research is being carried out on how to efficiently implement blockchain technology in different industries. Blockchains can be used in importing, exporting, and producing processes by diamond companies. Companies can use blockchain technology to describe the value of diamonds from the time of discovery to retail. The diamond industry is surely considered to shine brighter by evolving from current problems with Blockchain technology.