Diamonds could also be a lady’s finest pal, however sadly, the billion-dollar diamond trade is rife with scandal and fraud. There have been various instances the place lab-grown diamonds have been graded as pure diamonds. An instance of this was seen final yr when the Worldwide Gemological Institute analyzed and graded a 6.18ct lab-grown diamond, which was beforehand claimed to be a pure diamond on its Gemological Institute of America (GIA) report. 

It was additionally reported in 2005 that the Gemological Institute of America — which is likely one of the most trusted sources for evaluating gemstone high quality — was accepting bribes to improve its GIA reviews. Based on sources, a lawsuit was filed towards GIA in 2005 as a result of funds being accepted to “improve” the standard of diamonds submitted for grading.

As well as, customers are in a position to resubmit a diamond for examination at GIA for any cause. This is called a follow-up service. Consequently, diamonds will be related to a number of grading reviews. This may be problematic for customers since they is probably not receiving unique diamond certificates upon buy.

NFTs as a single supply of fact

Sadly, diamond certificates fraud is changing into extra frequent. Areas like India have even developed new frameworks to fight fraudulent actions, as seen within the Diamond Constitution drafted final yr. Whereas modern, trade consultants have additionally began trying towards blockchain expertise to assist clear up this rising drawback.

Particularly talking, nonfungible tokens (NFTs) might function an answer relating to stopping diamond certification fraud. Mike Moldawsky, founder and creator of Diamond Daybreak, informed Cointelegraph that diamond certification reviews ought to be positioned on a public blockchain community to make sure that paperwork can’t be manipulated. “Having a diamond certificates as an NFT on the Ethereum blockchain can guarantee immutability, proof-of-ownership and visibility for each retailers and customers,” he stated.

With the intention to show this, Moldawsky defined that Diamond Daybreak is a high-level NFT artwork challenge that may place 333 GIA-certified diamonds on the Ethereum blockchain as ERC-721 tokens. Privately invited contributors will then be capable of buy these diamonds as NFTs. Based on Moldawsky, contributors will be capable of buy a restrict of 1 diamond NFT, with weight various between 0.4-0.8 carats, for the value of 4.44 Ether (ETH). As soon as an NFT is purchased, a sensible contract will mechanically ship the diamond’s GIA certificates to the Ethereum blockchain, serving as proof of possession and verification.

Given the rise of NFTs tied to physical counterparts, Moldawsky additional remarked that NFT holders may have the choice to create a tangible artwork piece containing a GIA-certified diamond by way of the Diamond Daybreak web site.

“NFT holders will begin with a digital tough diamond and evolve their NFT on the blockchain (on-chain) with a course of that mimics exactly the in-real life pure diamond course of. In the end, the collector might want to determine whether or not they wish to preserve their diamond digital or burn it and rework it into its bodily kind,” he elaborated.

An instance of Diamond Daybreak’s bodily artwork piece – a case which is able to include a GIA licensed diamond. Supply: Diamond Daybreak

Based on Moldawsky, such a course of can also be meant to boost consciousness across the notion that digital NFTs can grow to be scarce over time and, subsequently, extra beneficial. “As extra collectors determine to assert the bodily artwork piece and burn the NFT, this can cut back the overall NFT provide. Consequently, digital NFTs will grow to be extra uncommon,” Moldawsky defined. 

He added that the digital diamond artworks have all been created by artist David Ariew, who not too long ago offered his first artwork at Sotheby’s Up to date Artwork Night for $224,000, alongside well-known artists resembling Banksy and Basquiat.

In both case, although, Moldawsky defined that Diamond Daybreak’s diamond certificates will stay on the Ethereum blockchain. “If a consumer chooses to create a bodily diamond artwork piece, they’ll obtain the paper GIA certificates along with the certification on the blockchain community. The objective of the challenge is to show proof-of-ownership, transparency and immutability of diamond certificates,” he remarked. 

Olivia Landau, a GIA-certified gemologist and co-founder of The Clear Lower — a digitally native diamond engagement ring and high quality jewellery firm — informed Cointelegraph that her agency can also be utilizing NFTs for diamond certification after launching an NFT platform on the Genuine blockchain community in January. She stated:

“NFTs give {couples} buying an engagement ring the choice to have the entire diamond’s certificates, insurances, pictures and even their proposal story saved safely on the blockchain for years to return, eliminating the concern of hanging onto hard-to-replace paper copies.”

Landau added that the aim behind the NFTs supplied by The Clear Lower is to digitize and authenticate a diamond’s GIA report and insurance coverage paperwork. “The Clear Lower’s NFTs aren’t meant to be resold on secondary marketplaces,” she stated.

An instance of The Clear Lower’s NFT portal. Supply: The Clear Lower

Based on Landau, purchasers who buy a diamond ring from The Clear Lower may have the choice to purchase a corresponding NFT for a further $500, which is to be paid in fiat somewhat than in crypto. She famous that present purchasers may also have this feature. 

“Within the beta testing section, over 90% of purchasers expressed preliminary curiosity on this new NFT operate.​ Prospects will obtain a tough copy of their GIA certificates and a replica of will probably be saved digitally, guaranteeing its worth for all times,” she stated.

Will NFTs exchange conventional diamond certificates?

NFTs as digital diamond certificates could also be modern, but it stays questionable if this idea resonates with the mainstream.

As an example, Moldawsky identified that he believes extra training round blockchain is required to ensure that conventional organizations to know the potential behind NFTs. “We have to ask GIA why they haven’t gone digital but. As soon as that dialog is initiated, we are able to clarify why blockchain expertise is transformative,” he stated.

Whereas this can be, it’s notable that GIA is open to digital transformation. Stephen Morisseau, director of communications for GIA, informed Cointelegraph that early subsequent yr, GIA will start transitioning all of their gemological laboratory reviews to digital varieties. “This ought to be accomplished that by 2025,” he remarked. Morisseau added that every one of GIA’s printed reviews have a number of security measures, noting that the knowledge on any report will be verified utilizing the safe on-line GIA Report Check service.

Adoption of NFTs inside the diamond trade might also achieve traction as soon as mainstream retailers start implementing the expertise. As an example, De Beers is presently utilizing the Tracr blockchain to trace the origins of its diamonds.

Jason McIntosh, chief product officer for Tracr, informed Cointelegraph that NFTs are prone to be a part of the platform’s resolution sooner or later. “Diamonds on the Tracr platform are ‘NFT-ready’ within the sense that the Tracr diamond report can simply be included inside an NFT wrapper,” he stated.

Given this degree of innovation, Landau believes that sooner or later, all diamonds will probably be authenticated by way of a blockchain community. Nonetheless, she identified the significance of guaranteeing that buyers don’t have to fret concerning the technical elements behind NFTs:

“Prospects don’t have to have any crypto or blockchain expertise to achieve entry to our NFTs. Every thing is dealt with for them effortlessly. I imagine this can drive mainstream adoption.”