The new solution allows sealing and registering diamonds as well as tracing their origin through Blockchain. It would be possible to exchange diamonds as fast as it is conducted with cryptocurrencies
The possibility of classifying diamonds for exchange in a more efficient way is now possible thanks to blockchain technology.
Diamond Standard, a company dedicated to the sale of diamonds, decided to use a hardware solution based on blockchain technology, according to an official press release.
As the company explained, diamonds offer more advantages than gold does, due to their small size and easy classification. This feature gives diamonds more value per ounce. However, when it comes to exchange processes, diamonds are much harder to standardize than gold is. Because of this, the company created a new blockchain-based token backed by real physical diamonds.
Cormac Kinney, CEO of Diamond Standard, commented that diamonds represent a valuable natural resource. “Each of them is different, so the price also varies. Diamonds are valuable natural resources, but institutional investors cannot use them. Unlike gold and platinum, each diamond is different, so the price is negotiable”, he said.
The U.S. and Bermuda-based company aims to solve this industry problem using blockchain technology combined with a hardware solution. The company sells diamonds in the form of coin-sized discs and credit-card shaped bars. Each Diamond Standard Coin is priced at $10,000 whilst the Diamond Standard Bar is priced at $100,000.
“We created a diamond commodity by grouping sets of diamonds in a fair and transparent way. The sets are fungible, the diamonds are independently certified, and the key is that they are obtained through a regulated exchange, with market-driven price”, Kinney said.
The “Friendly Hand” of Blockchain
Diamond Standard’s new solution is to seal the diamonds, register each of them and trace their origin through the chain of blocks. In this way, it would be possible to exchange diamonds as fast as it is done with cryptocurrencies.
In this way, another of the advantages offered by blockchain technology is that diamond owners can store these precious stones in safe vaults and audit them from anywhere in the world using a smartphone in case they need it, avoiding the risk of saving the diamonds in unsafe places.
“This initiative was only possible with blockchain, which provides a permanent public record of the content and geological origin of each product. Blockchain allows audits and transactions”, Kinney added.
The Diamond Standard Coin is a fungible diamond sets sealed in resin with a military grade wireless encryption chip. Kinney says that this blockchain token can be easily authenticated as well as remotely audited. “Every aspect of the Diamond Standard commodity is public and can be verified by anyone on the blockchain platform”, he says.
The company has also been concerned about the custody of valuables; therefore, it will also develop hardware for custodians to conduct continuous audits of their belongings through the Internet.
Diamond Standard Exchange is currently seeking regulatory approval from the Bermuda Monetary Authority. Once having the request approved, users will be able to trade the Diamond Standard Coin on the exchange platform. Another advantage is that users can hold the commodity themselves or choose a custodian. In this way, blockchain technology continues reaching more and more fields.
By Maria Rodriguez