Having thrived for decades on the integral role of diamonds in romantic relationships, the $80 billion-dollar diamond industry confronted a grave threat to its brand in the early 2000s by embracing a multi-stakeholder effort to eradicate “conflict diamonds.” The so-called Kimberley Process brought significant progress, but the largely paper-based diamond certification process has been plagued by corruption, forgeries and inefficiencies, resulting in many conflict diamonds entering the supply chain illegitimately. Efforts to ameliorate the often-harsh realities of the global diamond trade have also fallen short in the eyes of the industry watchdogs, which point to ongoing violence and human rights violations in diamond-producing countries such as Angola, Zimbabwe and the Central African Republic as further evidence of the Kimberley Process’s failure.
In a case study commissioned by the Blockchain Research Institute, the DEEP Centre’s Anthony Williams explains how a London-based startup, Everledger, is using blockchain technologies to create a global digital ledger for diamonds that enables producers, consumers, insurers and regulators to track the flow of individual diamonds through the supply chain, from the mines where they are unearthed right through to jeweler’s display case. Incorporating blockchain into the diamond supply chain has several other benefits, such as eliminating insurance fraud and reducing the potential for corruption, money laundering and other problems associated with the diamond trade.
The case sheds light on the potential for blockchain to not only verify the authenticity, provenance, and custody of diamonds, but of a wide range of high-value items, from luxury automobiles to rare wines and priceless works of art.
The case study is available for download here.