Diamonds are a Girl's Best Friend
Picture this: You come home from a long day and waiting for you, on your bed, is a little blue box. Oh no, not just any little blue box. THE little blue box. Wrapped oh so neatly with the perfect white bow. Ahhh yes, that mecca of all things beauty & grace, the little blue box from Tiffany & Co.
After squealing for a minute or two at the site of your little 7-year-old dreams coming true, imagine if when you unwrapped that Tiffany blue box, you found out your diamond was FAKE.
Oh yes, there are fake diamonds on the market. Now obviously, the diamonds from the Tiffany and Co store are not fake, but there are plenty of diamonds on the market that are tampered with and/or synthetically created. In fact, there is actually a $5 billion dollar short fall in the market. And at the core of the issue? Things are still based on a handshake and promise from whoever sells you the diamonds… there is no real way to hold them accountable.
Leanne Kemp who has spent over 20+ years in the tech sector and attended the Gemological Institute of America in New York, making her an accredited jewelry consultant (diamond essentials completed) realized there was a niche in this market that was yet to be solved. After years of experience with diamonds and little success in a solution… in came blockchain and so, Everledger was born.
Everledger is a startup that uses blockchain technology to assist in the reduction of risk and fraud for banks, insurers, and open marketplaces… like diamonds. Leanne Kemp, CEO and Founder, decided to take the initiative to put diamonds on the blockchain. By tracking and tracing every single step of a diamond’s life, regardless of resale and re-entering into the market, applying a system that is completely transparent and unalterable is a much more assured way of limiting historic issues.
Now maybe you know more about the authentication process of gems than I do, but let me tell you, it is not easy to verify you’re getting the real goods. For starters, back in early 2000s, the UN – yes the UNITED NATIONS – got involved in the industry. Yeah okay what business do they have in a Harry Winston rock? Well, turns out it is a little less about Harry Winston or Cartier and more about blood diamonds… like the Leonardo DiCaprio Blood Diamonds movie type of diamonds.
Anyway, the Kimberly Process, uniting 81 countries, was created.
“The Kimberly Process (KP) united administrations, civil societies, and industry in reducing the flow of conflict diamonds – ‘rough diamonds used to finance wars against governments’ – around the world.”
I don’t know tons about it, but apparently it’s sort of the core of the diamond industry and uses some 3-step validation, so it’s got to be important.
You’re probably wondering what this foreign policy lesson has to do with blockchain so let me break it down. Essentially, a large part of Leanne Kemp’s efforts were to digitize those steps of validation – figuring out how to do it better and faster while doing it digitally, especially as diamonds come across borders (I can barely keep track of my luggage when I leave the country so million dollar products must be a bit intense). Therefore, Everledger’s Diamond Time-Lapse Protocol was created enjoying the core infrastructure set forth by the Kimberly Process from the UN! The expected benefits are $60 billion globally (when including luxury goods) - Crazy!
The Diamond Time-Lapse Protocol is a “traceability initiative built on a blockchain-based platform for the diamond and jewelry industry. The aim is to engage all industry participants including manufacturers, retailers and consumers to know a diamond’s story from the origin to the end customer.” It is integrated with IBM Watson (Artificial Intelligence). Check out a video explaining how a diamond is secured here. In 2015, Everledger started to securely track and trace the authenticated provenance of diamonds. Now, just 3 years later, over 2 million diamonds have been encrypted on the blockchain.
But why is blockchain the right solution for this industry? Well, it seems to be the best way to take the already set human protocols (i.e. the Kimberly Process) and transform them to digital protocols. It’s able to parallel what the technology does while creating a registry that represents what human systems do at the core.
When I spoke to Ms. Kemp, the first thing that crossed my mind was “but isn’t that difficult…” and it honestly doesn’t seem as bad as I thought. From the technical side, the biggest obstacle is the ability to operate between existing changes – i.e. on chain and off chain transactions in order to ensure they can still adhere to some of the changes. However, moving ledgers towards privacy doesn’t seem too rough considering it favors the technology and will rapidly advance. Therefore, the biggest risks are risks in education (making sure the market is educated correctly), and applying the correct technology at the correct time – it’s not just blockchain alone!
Pretty cool, right? As Kemp said in our interview, “There is a problem here, it needs to be solved, and here is how you can do it.” BLOCKCHAIN BABY!
*** Sadly, no diamond rings in the Tiffany boxes feature. Just props :(