Can Blockchain Diamonds Solve Ethical Sourcing and Grading Issues?
What is Blockchain?
Blockchain is a form of distributed ledger technology. Simply put, it’s a decentralized network of computers that each hold a ledger of transactions. Any computer can add a data block to the ledger (or chain — hence, “blockchain”). However, no one computer acts as the central authority. Instead, for a transaction to be added to the ledger, each computer must validate the transaction. This happens through cryptography. Once added to the ledger, a transaction is permanent and can’t be erased.
Bitcoin is the most famous blockchain network, but blockchain isn’t just for cryptocurrencies. Any piece of information can be added to the ledger as a data block. Many industries, such as financial services (banking), are excited about blockchain and its potential to speed up transactions, reduce costs, and improve data security. The diamond industry is now also exploring the possibilities of blockchain networks.
How Can the Diamond Industry Use Blockchain?
Blockchain may prove very useful for tracking the provenance of a diamond in a more transparent manner. Let’s look at how that might work.
First, we need to identify the stakeholders in the diamond value chain. They include the following:
- Producers (for example, a diamond miner)