11 Mar 2020

Making the commercial case for blockchain diamond tracking

BY LOUISE MERCER

// Chief Experience Officer

The diamond industry has reached a broad consensus that greater transparency is the right thing to do, with blockchain diamond tracking one of the key ways to achieving that end.

As industry leaders have agreed on the need to eliminate conflict stones, improve worker rights along the supply chain and take a more sustainable approach to environmental impact, full track and trace methodologies, of which digital twins stored on the blockchain for each stone could be considered a key enabler, have become the golden industry standard.

The business imperative of transparency is evident too. Shareholders and customers – especially millennials and independent women, two major markets for diamond jewellery – are increasingly motivated by sustainability. Transparency enables visibility over how sustainable a diamond is, as its full life cycle is immutably recorded on the blockchain.

But if the WHY is clear, the HOW is perhaps less well understood. This is where blockchain diamond tracking has the potential to make a discernible difference.

There are already plenty of inspiring examples of how both downstream and upstream leaders are bringing about positive change, when they work closely with each other to extend best practices to smaller diamond manufacturers. These leaders are stretching their sphere of influence further along the supply chain, which should be good for everybody.

However, doing the right thing isn’t enough from a commercial perspective. You need to prove that you are doing it. This takes hard evidence, because choosing a diamond is an emotional decision. It’s not enough to pay lip service to transparency with a few well-meaning statements, statistics or a glossy photograph. Customers need to know deep in their hearts that a purchase reflects their own values. They are prepared to ‘vote with their wallets’, favouring those brands that can prove their ethical practices beyond possible doubt. In the battle for trust, seeing really is believing.

Diamond blockchain solutions help to provide certainty

At Everledger, we use a symphony of different technologies including blockchain, AI, IoT and nanotechnology to create a digital twin of every diamond: a secure and permanent digital record of an asset’s origin, characteristics and ownership. Our platform is designed to benefit those industries and companies that face strict requirements to evidence the provenance and traceability of their products. This transparency helps our clients respond to growing expectations for sustainable, verifiable sourcing. Our solutions are built on not only advanced technology, but also deep knowledge of the industry, rooted in corporate citizenship principles. We work together with partners to increase their value – more responsibly, more sustainably and more efficiently.

We believe that ever more transparency and knowledge will help the diamond industry to push for further improvements in ethical sourcing, by acting in concert throughout the supply chain. Transparency can be a potent force for change in the diamond industry. We therefore want to harness this game-changer as a tool for driving sustainability on behalf of our clients, who need to meet their own customers’ rising expectations around ethical sourcing.

Blockchain solutions facilitate tracking from mine to consumer, enabling easier compliance against increasingly strict measures. Everledger is ISO27001-certified, evidencing the highest level of trust on information security and data protection. Through unprecedented collaboration with miners, manufacturers, certification houses and retailers, we provide independent, tailored solutions for the industry. With information out in the open, we believe the value of diamonds will be shared by all stakeholders throughout the value chain. At every link, our partners are tracking the story of each stone, more easily and accurately than ever before.

Clients see the worth of blockchain-enabled diamonds

Last year we launched version 2.0 of our blockchain platform, with the aim of increasing levels of transparency across complex and regulated supply chains. For example, US-based retailer Fred Meyer Jewelers uses the Everledger platform to show the journey of its diamonds in its RockSolid collection, which has been extended across 100 stores in the United States.

Others are sharing in our vision. We have recently completed our $20 million Series A funding, with the backing of Tencent, China’s leading internet-based services provider. Tencent’s mission to improve the quality of life through Internet value-added services is an integral part of our own business model.

Indeed, the fruits of this investment are already growing with the launch of a pilot Mini Program for blockchain-enabled diamonds on Tencent’s WeChat platform. The Mini Program will provide information of a diamond to consumers looking to make an informed purchase online. In partnership with the world’s largest diamond company Alrosa, the new Mini Program will put transparent and secure information – such as origin, grading and ownership – at the fingertips of more than a billion active users on WeChat.

Diamond blockchain initiative can be a source of growth

In response to customer demand for transparency, Chow Tai Fook Jewellery Group and the leading independent diamond grading authority Gemological Institute of America (GIA) approached Everledger to design a solution that would deliver secure, digital diamond grading reports on the blockchain. Customers of Chow Tai Fook’s T Mark luxury brand now receive a permanent and immutable blockchain record of their diamond’s GIA grading information, giving them additional assurance and transparency of their diamond grading and traceability information. This industry breakthrough adds a new dimension to their customers’ experience of owning a diamond.

Effectively, T Mark diamonds are certified twice: first by Chow Tai Fook, ensuring traceability, truthfulness, thoughtfulness and transparency, and then by GIA’s digital grading report identifying each stone’s colour, clarity, cut and carat weight. Consumers can access this information, secured by our blockchain technology, by a mere tap on a mobile app.

Trace blockchain diamonds from mine to finger

By exposing the whole journey of the diamond, our solution is also protecting against unfair trade and unethical sourcing. This allows buyers to be more knowledgeable about their purchase, in order to avoid the pitfalls of diamonds that don’t meet Kimberley Process standards or originate from conflict zones.

We have also partnered with Brilliant Earth, a specialist in ethically sourced bridal and fine jewellery, to launch diamonds with provenance tracked on the blockchain for sale online. Our cutting-edge blockchain-based solution has been integrated with Brilliant Earth’s supply chain to seamlessly and securely track diamond origin and provide greater consumer assurance around responsible practices for a collection of diamonds. This is a milestone step in defining next-generation standards within the jewellery industry, promoting transparency and responsibility.