How can one ensure that the diamond or precious stone is real or fake? How do you guarantee the ethical source of these stones? Collectors, jewelers, and dealers all suffer the same challenges. Consumers want to know that children didn’t mine the materials nor they were sourced from conflict zones.
Another concern is how to secure and trace the movement of jewelry within a shattered and non-transparent supply chain. Also, how can one validate ownership of a piece in case it is called into question? Well, a number of industry leaders in jewelry have found a solution to these challenges. They have acquired a distributed ledger technology to record such information. And, blockchain enthusiasts agree that the technology could be exactly what is needed to revolutionize this industry.
How to Track Precious Stones on Blockchain
As we already know, blockchain is the technology behind digital currencies such as bitcoin. But, this technology can actually track any product, whether physical or virtual, from one place to the other. This is, however, only possible if all the involved participants are registered on a blockchain platform. Meanwhile, they can securely enter their reports into it.
Some of the ways in which businesses could use the blockchain technology to their advantage include designing traceable, tamper-proof packaging, closely monitoring the movement of materials or finished goods from one stage to the next. All these practices work towards ensuring that perfect data is created. That would make it extra hard for illegal or unwarranted additions to be initiated into existing production and distribution systems.
Furthermore, using blockchain will help businesses to realize greater efficiency and transparency. For instance, there will be no need for paper invoices and information silos. Ideally, this process reduces human error and boosts trust among different parties in the jewelry industry. In time, it will redefine how luxury industries do business!
Industry Leaders Already using Blockchain to Track their Stones
As stated earlier, a number of leading jewelry companies have been struggling to prove the legitimacy of their precious stones. They have launched a digital distributed ledger based on the blockchain technology. Their aim is to enhance global provenance in the jewelry supply chain. Let’s look at some of them:
Last year, De Beers- a company that controls almost 35% of the entire world’s diamond production, unveiled Tracr, an initiative meant to connect the Diamond industry. Their most notable features are traceability, provenance, and authenticity throughout the whole value chain.
The same year, De Beers claimed that they have tracked 100 high-value diamonds. They could do it all the way from the mine to the jeweler using blockchain. This system was not only meant to ascertain the diamond’s authenticity but to prove that the gems were not mined in war-prone areas where their sale could be used to fund violence. As per their press release, this was actually the first time the movement of diamond has been electronically tracked from the miner to retailer.
Five leading diamond producers, KGK Group, Venus Jewel, Diarough, Rosy Blue NV, and Diacore are said to have worked closely with De Beers in the establishment of the Tracr platform. De Beers hopes that Tracr can be adopted throughout the entire diamond industry.
Tracr works by allocating an exclusive “Global Diamond ID” that documents diamond characteristics including clarity, color, and carat. This information is then transferred onto an unalterable digital ledger. Thereafter, Tracr verifies the information at each stage of the diamond’s journey.
Tracr aims to enhance public trust and consumer confidence that their diamonds are non-conflict. It also endeavors to increase efficiency in the jewelry’s supply chain.
The TrustChain Initiative
The same year, 2018, another jewelry industry consortium launched the TrustChain Initiative using IBM’s blockchain cloud service. This initiative was meant to help jewelry buyers verify the origin of gold and diamond necklaces, rings, and bracelets by checking an online link that traces them from the mines to jewelry stores.
The TrustChain Initiative collaborators include an independent third-party verification service UL, precious metals supplier LeachGarner, precious metals refiner Asahi Refining, jewelry producer the Richline Group, and jewelry retailer Helzberg Diamonds.
The TrustChain aims to assure consumers that their jewelry pieces are from a trusted source. This is done through digital verification, third-party oversight, and physical product and process authentication.
Provenance Proof Blockchain
In Switzerland, Gübelin Gem Lab launched its first colored blockchain to help track the movement of gemstones at every stage along the supply chain. Known as the Provenance Proof Blockchain, the purpose of this initiative is to provide the jewelry industry with a system that allows honest transparency concerning the source and movement of gemstones. Its reports are trusted by popular auction houses, jewelers, royal families, collectors, and gem traders globally who are searching for independent, unbiased, and completely trustworthy judgment about their gems. The journey of a gemstone starts at the mine, which is ideally where the blockchain starts. Every transaction and movement adds a record to the blockchain, and this brings out the complete picture of the journey of a gemstone, right from the mine to the retailer.
It is evident that blockchain is vital to the global supply chain of gemstones. But, let’s not forget that it is still a new technology with plenty of barriers, especially for the smaller brands. First, there is the issue of high initial investment costs, and then the need to acquire a digital wallet. You will also have to go through all the intimidating and confusing jargon just to get onboard. What’s more, there is the issue of many blockchain service providers who are always creating their own separate blockchains, and this can be counterproductive. Indeed, there is a lot to be fixed for the jewelry industry to realize the full benefits that come with adopting the blockchain technology into their supply chain.