Have you ever thought about how blockchain could affect the diamond industry? Probably not, right? But now blockchain technology could improve how we track diamonds, from the mine to the jewelry store.
But there’s an issue with diamonds. As with any popular industry, the diamond market isn’t exactly squeaky clean. Some diamonds, known as conflict diamonds, are illegally traded to fund wars abroad. You may not know this due to the high demand for diamonds. Almost 50 percent of the demand for diamonds come from the US — and it isn’t a surprise. After all, it is the go-to jewel of engagements and weddings. And because of its hardiness, diamond is ideal for industrial use.
That said, mining for diamonds can be a violent affair. The 2006 hit Blood Diamond, starring Leonardo DiCaprio, introduced the travesties related to diamond mining in Africa to the world’s stage.
Regardless, stakeholders in the diamond industry rightfully want to stop the trade of conflict diamonds, and blockchain might be the solution.
What Is a Conflict Diamond?
For those who don’t know, a conflict diamond is an uncut diamond that is mined in an armed conflict zone. The diamond is then traded, and the funds are used to finance the fighting. These blood diamonds are usually associated with conflicts in central and western Africa.
According to CNN, about 4 percent of the world’s diamond population came from Sierra Leone during its civil war (1991-2002). And that’s from just one country! In an article by CBS, experts suggested that blood diamonds could make up 15 percent of the diamond trade.
Despite these statistics, there are measures in place that attempt to smother the illegal industry. The primary actor is the Kimberley Process. This certification scheme connects local governments and international organizations to solve the problem. Their solution: Ensure every shipment of diamonds from these areas has certification.
Does It Work?
The Kimberly Process says it does and claims a 99.8 percent success rate.
But with so many intermediaries, and so many steps between mining and selling the diamonds, fraud is still highly probable. Many believe the process could be more effective, including the diamond giant De Beers.
Source: This article by Kelsey Ray first appeared on CoinCentral.com.