Gold and diamonds are the precious metals that have the potential to decide the economic situation of a nation. In addition to being utilized in the nation's reserves, gold and diamonds are common metals used in expensive jewelry. Because of this, there is always a sizable market for the diamond and gold industry worldwide.
It is estimated that there are around 53,000 tonnes of unidentified gold and 201,296 tonnes of extracted gold across the world, while the diamond reserves in Russia are alone estimated to stand at 1.1 billion carats. This level of widespread metal extraction indicates the need and huge market both the industry holds.
However, this expensive market has forced gold and diamond businesses to operate privately. To eradicate this hidden structure of the industry and eliminate illicit owning, Blockchain-enabled tracking was introduced. The London Bullion Market Association (LBMA) and the World Gold Council have joined the initiative to make the industry more transparent.
Blockchain and DLT Ledgers in the Jewelry Industry
Decentralization and distributed ledgers are the core idea of blockchain technology that streamlines and enhances an ethically transparent structure for any industry that adopts the technology.
In the metal industry, especially for gold and diamonds, blockchain integrates the assets as NFT to trace the provenance and sovereignty of the asset, such that they are tracked from mine to market to customer anytime.
Although the Hallmarking and Kimberley processes foster trust among holders of the metals, it is impossible to determine whether the jewels are composed of genuine metal. Blockchain resolves this hidden chain by bringing the data of tokenized assets on-chain, which is neither deleted nor modifiable.
This also eliminates the counterfeiting market and identifies the conflicted jewels. Thus, all the data from the process of transporting them from the mine to the market is available online and is open for anyone to verify. Few benefits that these DLT ledgers bring are as follows:
Ensures transparency of the tokenized assets from the point of origin and is verifiable anytime.
Exposure to smart contracts ensures that the asset can be bought and sold authentically without relying on third parties.
Blockchain tracking almost eliminates the counterfeiting market.
All the details of the raw materials and parties involved in the making of gold and diamonds are encoded.
The end-user has the confidence of owning an authentic product where the certifications are immutable on-chain.
Process of Diamond and Gold Extraction from Mine to Market
The extraction of both diamond and gold from the earth’s core and bringing them to the market is not an easy task that is done in weeks.
Both the gold industry and diamond industry rely on several intermediaries to bring the product to the market. Furthermore, there are rules and regulations and further licensing practices, which take a lot of paperwork and consume more time with a large possibility of human errors.
Though licensing practices are made simpler, tracing them back and forth becomes difficult as they are on paper.
When all these processes are made on-chain, the transfer and tracking processes become fast and accurate. In a few years, the blockchain tracking process might be adopted across the industry to manage these assets.
Some successful blockchain use cases for tracking metals are implemented by a few entities such as De beers, Everledger, and Trust chain to maintain the authenticity of precious metals.
Blockchain Use Cases in the Diamond and Gold Industry
The brand De Beers, world-renowned for its collection of the finest diamond jewelry, uses blockchain to trace the provenance and place of origin of the diamonds used in their jewelry.
De Beer enables the Tracr network to track back the diamonds. The Tracr network, which was tested in 2018, was successfully implemented in the first half of 2022. The brand registered around 25% of its production through the Tracr network. This aligns them with their customers to bring in the enjoyment of using authenticated assets.
In 2022, IBM announced that the company would be using a Trust chain to verify the gold and diamonds supply chain.
After IBM, the network onboarded several metal traders like Asahi Refining, Helzberg Diamonds, LeachGarner, Richline Group, Inc., and many more to assist them in tracking.
The Bottom Line
The global diamond industry and gold industry, along with other metal traders, are keen on adopting leading blockchain technology to make their supply chain process fast and transparent.
The CEO of De Beers states, ‘‘Confidence in diamond origin is extremely important, and we look forward to seeing the roll-out of this new program delivering new benefits to the diamond industry and giving more assurance to consumers," indicating the importance blockchain and distributed ledger technologies shall serve in shaping the future of the metal industry.
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