Blockchain Raising the Gold Standard
Due Dilligence for Precious Gems & Metals
Following a steep decline in sales during the United State’s longest recession, diamonds and gold are making a comeback. There has been a particular loss of confidence among Millennials. Persistent challenges include competition from other luxury goods and a mounting risk that lab-grown diamonds will illegally infiltrate the natural-diamond supply. Further, there is the stigma of “blood diamonds,” a term denoting financed conflicts and human-rights abuses.
According to a detailed Human Rights Watch report issued earlier this month, numerous initiatives did not meet expectations. These include the industry-led Responsible Jewelery Council (RJC) certification standards and the multi-stakeholder Kimberley Process certification scheme. Even the OECD Due Diligence Guidance has fallen short of providing the level of certainty expected by merchants and consumers. Coming to the rescue of these age-old industries will be blockchain technology – tracing diamonds and gold back to their mines of origin, a move vital to the international due diligence movement for precious gems and minerals.
Tracking the Treasure
On May 10 of this year, global diamond giant De Beers published a press release. They stated that it had successfully tracked 100 high-value diamonds from the time they left the mine until they reached the retailers’ door using blockchain technology over a platform called Tracr.
The press release states this was the “first time a diamond’s journey has been digitally tracked from mine to retail”. Using a “Global Diamond ID,” Tracr tracks each diamond according to its unique characteristics. These are the three Cs – carat, clarity, and color. It then verifies the diamond’s movement, starting from the mine until it reaches its intended destination.
SCS Global Services, an internationally recognized certification body and standards developer, also announce that its diamond provenance certification program now incorporates advanced laser testing that can identify the source of any rough, cut, or polished diamond, anywhere in the chain of custody. Use of this disruptive technology assures diamond retailers and consumers alike. It ensures that diamonds for sale or purchase are not coming from conflict-affected and high-risk sources.
The TrustChain Initiative is a collaboration among responsible and ethical organizations across the jewelry industry supported by the governments. The initiative, in collaboration with IBM, includes Asahi Refining, Helzberg Diamonds, LeachGarner, Richline Group and Underwriters Labs. This unique solution tracks and authenticates gems and jewelries at all stages of the global supply chain, from the mine to the retailer, and to the consumer.
Emergent Technology Holdings LP (EmTech) has created a blockchain-powered supply chain platform that tracks gold, from a mine to a storage facility. The company has also developed a digital currency, G-Coin that is backed by gold. According to the company’s website, they have identified the risks involved. Consequently, they have implemented necessary controls to ensure all gold on the blockchain platform is conflict-free. Thus they are offering clients a new vehicle for ethical investment.
GoldMint aims to back its virtual token, GOLD, with actual gold from prevailing precious metals ecosystems. The company’s goal is to drive the future of gold markets using an automated vending machine model. Using this individuals can purchase, sell and trade gold with ease and efficiency using the GOLD crypto asset. The company aims to make its native GOLD tokens the unit of trade for these transactions, exchangeable for real gold via a process that verifies the quality of the metal traded by small sellers using the blockchain. One GOLD crypto asset would equal one ounce of gold on the LBMA, which is rated 999 in purity.
VaultChain account balances and ownership are managed on the cryptographically secure Tradewind blockchain database. VaultChain is investment grade physical gold and silver vaulted with the Royal Canadian Mint.
Leading jewelry companies that have previously struggled with proving consumers with proof of authenticity are now launching blockchain solutions in jewelry supply chains. This technology will eventually allow us access to entire gold or diamond supply chains just by scanning an implanted QR code on our smartphone. These digital ledgers also track and protect various ores and gems, from mines to consumers, creating a permanent and tamper-proof record on the blockchain.