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Can Blockchain Solve The Problem of Blood Diamonds? - DZone Security

Tracking and tracing diamonds might not be an issue directly relevant to those not ring shopping, but the reality is that it's a ludicrously lucrative industry that is teaming up with the latest blockchain technology to solve problems that have plagued sector for many years. Efforts such as the Kimberley Process were established over a decade ago in attempts to eradicate the purchase of conflict diamonds, also known as ‘blood' diamonds, which are rough diamonds used by rebel movements or their allies to finance armed conflicts aimed at undermining legitimate governments. 

However, despite plenty of good will, the diamond industry faces significant challenges when it comes to security, trust, and transparency. It's an industry that has failed to maintain authentic accurate records about the source and provenance of diamonds, as well as identifying lab-grown diamonds fraudulently sold as natural mined diamonds, and transactions between traders and buyers. 

This week, diamond miners, Alosa, joined Tracr, the diamond supply chain platform conceived by De Beers in 2017 as a comprehensive mine-to-customer traceability solution for the entire diamond industry. The pilot project, involving a small group of industry participants, launched in January 2018. De Beers is a major player in various parts of the diamond value chain, providing roughly one-third of the global supply of diamonds by value, and it has long-standing relationships with all relevant industry players. Alrosa’s involvement brings the world’s two largest diamond producers together to provide proof of provenance and authenticity of diamonds. 

Tracr is designed as an inclusive and open platform for the diamond industry. It can track a diamond as it changes hands multiple times across the diamond value chains. Data uploaded will help create an immutable and tamper-proof trail of a diamond’s journey along the value chain providing benefits for all participants.

Traveling the Diamond Trail

From the mine to the consumer, diamonds undergo a journey from the mining company, through rough purchasing tenders, the long manufacturing process, to the diamond trader, and finally the retailer. Further, diamonds are processed along the way and may be cut into a number of smaller, polished diamonds by documenting this journey through blockchain technology, increasing the trust and transparency of the diamond’s origins and journey.  It means that a diamond's provenance cannot be tampered with and a diamond cannot be sold with a fake report. The diamond’s source from a particular country or mine is secured, which can help in the processes used to combat the problem of conflict diamonds.

The permanence of the blockchain means that even if the diamond is resold in a second-hand market, its provenance and the digital history will remain intact and untouched. For an industry that has often struggled with issues of flagging consumer confidence, blockchain may well be the ideal solution.

“The Tracr project team has demonstrated that it can successfully track a diamond through the value chain, providing asset-traceability assurance in a way that was not possible before,” De Beers chief executive Bruce Cleaver said.

Diamond Solutions Are Burning Bright

While they may appear a niche space, Tracr has considerable competition. In 2015, Everledger started creating a comparable offering, releasing The Diamond Time-Lapse Protocol last year. Working with a range of stakeholders across the diamond supply chain including diamond manufacturers and downstream retailers, Everledger has since encrypted the provenance of over 2 million diamonds in a short three years. In addition to their focus on diamonds, they've also partnered with Switzerland's Gübelin Gem Lab, to create the first colored gemstone blockchain platform. It will be rolled out free for all, and open to every participant of the global gemstone and jewelry sector. IBM is also at work in the space with an initiative based on the IBM Blockchain Platform and the Hyperledger Project to track and authenticate diamonds and precious metals from their place of origin to their retail location.

This year, we've finally started to see blockchain solutions traversing from pilots to actual use cases with industry engagement, particularly in shipping and logistics. I'm hoping blockchain companies will learn from the hundreds of IoT platforms competing for customers by building customer bases prior to development, but something tells me the number of blockchain companies rubbing up against each other with competing products is only set to expand.