Diamonds could also be a girl’s greatest pal, however sadly the multi-billion dollar diamond business is riddled with scandal and fraud. There have been numerous situations the place lab grown diamonds have been labeled as pure diamonds. An instance of this was seen final yr when the Worldwide Gemological Institute analyzed and graded a 6.18-carat lab-grown diamond that was beforehand described as a pure diamond in its Gemological Institute of America (GIA) report.

It was additionally reported in 2005 that the Gemological Institute of America – one of the crucial trusted sources for assessing gem high quality – was accepting bribes to enhance its GIA reviews. Sources say a lawsuit was filed towards GIA in 2005 for accepting funds to “improve” the standard of diamonds submitted for grading.

As well as, shoppers can resubmit a diamond for GIA evaluate for any cause. That is known as a follow-up service. This permits diamonds to be linked to a number of valuation reviews. This may be problematic for shoppers as they might not obtain authentic diamond certificates upon buy.

NFTs as a single supply of fact

Sadly, diamond certificates scams have gotten more and more frequent. Areas like India have even developed new frameworks to fight fraudulent exercise, based on the Diamond Constitution drafted final yr. Whereas innovating, business consultants have additionally began blockchain know-how to resolve this rising downside.

Particularly, Nonfungible Tokens (NFTs) can function an answer with regards to stopping diamond certification fraud. Mike Moldawsky, founder and creator of Diamond Daybreak, advised Cointelegraph that diamond certification reviews needs to be positioned on a public blockchain community to make sure paperwork can’t be tampered with. “A diamond certificates as an NFT on the Ethereum blockchain can guarantee immutability, proof of possession and visibility for each retailers and shoppers,” he stated.

To show this, Moldawsky defined that Diamond Daybreak is a high-profile NFT artwork undertaking that can place 333 GIA-certified diamonds as ERC-721 tokens on the Ethereum blockchain. Privately invited members can then buy these diamonds as NFTs. In keeping with Moldawsky, members can buy a restrict of 1 NFT diamond weighing between 0.4 and 0.8 carats at a worth of 4.44 Ether (ETH). As soon as an NFT is bought, a sensible contract routinely sends the diamond’s GIA certificates to the Ethereum blockchain, which serves as proof of possession and verification.

Given the arrival of NFTs tied to bodily counterparts, Moldawsky additional famous that NFT holders may have the power to create a tangible murals containing a GIA-certified diamond via the Diamond Daybreak website.

“NFT holders will begin with a digital tough diamond and evolve their NFT on the blockchain (on-chain) with a course of that carefully mimics the pure diamond course of in actual life. Finally, the collector should determine whether or not to maintain their diamond digitally or burn it and remodel it into its bodily kind,” he defined.

An instance of Diamond Daybreak’s bodily paintings – a case that comes with a GIA licensed diamond. Supply: Diamond Daybreak

In keeping with Moldawsky, such a course of must also increase consciousness that digital NFTs can turn out to be scarce and due to this fact extra useful over time. “As an increasing number of collectors determine to assert the bodily paintings and burn the NFT, it’s going to cut back the general NFT provide. Because of this, digital NFTs have gotten rarer,” defined Moldawsky.

He added that the diamond digital artworks had been all created by artist David Ariew, who just lately bought his first paintings at Sotheby’s Up to date Artwork Night for $224,000 alongside well-known artists reminiscent of Banksy and Basquiat.

My collaboration piece with Jia Aili, The Street Forward, simply bought for $224,000 @Sotheby’s Up to date Night Public sale! I am misplaced for phrases. Many due to @triple_x_space and congratulations to @raoulmarks too! You’re unimaginable!! pic.twitter.com/oeff7zUuku

— David Ariev (@DavidAriev) April 27, 2022

In any case, nonetheless, Moldawsky said that Diamond Daybreak’s diamond certificates will stay on the Ethereum blockchain. “When a person chooses to create a bodily diamond paintings, they obtain the paper GIA certificates along with being licensed on the blockchain community. The aim of the undertaking is to show possession, transparency and immutability of diamond certificates,” he famous.

Olivia Landau, a GIA-certified gemologist and co-founder of The Clear Lower — a digitally native diamond engagement ring and effective jewellery firm — advised Cointelegraph that her agency additionally makes use of NFTs for diamond certification, having launched an NFT platform in Genuine- Blockchain community launched in January. She stated:

“NFTs give {couples} shopping for an engagement ring the power to securely retailer all the diamond’s certificates, insurance coverage, footage and even their proposal historical past on the blockchain for years to return, in order that they now not have to fret about hard-to-replace ones preserve 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. “Clear Lower’s NFTs aren’t supposed for resale on secondary marketplaces,” she stated.

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

In keeping with Landau, prospects who buy a diamond ring from The Clear Lower have the choice to buy a corresponding NFT for a further $500, payable in fiat as a substitute of crypto. She famous that current prospects can even have this selection.

“In the course of the beta testing section, over 90% of shoppers have expressed preliminary curiosity on this new NFT function. Purchasers obtain a paper copy of their GIA certificates and a duplicate of it’s saved digitally, making certain its lifetime value,” she stated.

Will NFTs Change Conventional Diamond Certificates?

NFTs as digital diamond certificates could also be progressive, however whether or not this idea will catch on within the mainstream stays questionable.

For instance, Moldawsky identified that he believes extra training about blockchain is required for conventional organizations to know the potential behind NFTs. “We have now to ask GIA why they don’t seem to be digital but. As soon as this dialog begins, we are able to clarify why blockchain know-how is transformative,” he stated.

Whereas which may be the case, it is value noting that GIA is open to digital transformation. Stephen Morisseau, GIA’s communications director, advised Cointelegraph that GIA will start changing all of its gemology lab reviews into digital types early subsequent yr. “This needs to be accomplished by 2025,” he famous. Morisseau added that every one of GIA’s printed reviews have a number of safety features, noting that the knowledge in every report will be verified utilizing the safe on-line GIA Report Examine service.

The adoption of NFTs within the diamond business might additionally acquire traction as soon as incumbent retailers begin implementing the know-how. For instance, De Beers at present makes use of the Tracr blockchain to hint the provenance of its diamonds.

Jason McIntosh, Tracr’s chief product officer, advised Cointelegraph that NFTs are prone to be a part of the platform’s answer sooner or later. “Diamonds on the Tracr platform are ‘NFT-ready’ within the sense that the Tracr diamond dataset will be simply built-in into an NFT wrapper,” he stated.

Given this level of innovation, Landau believes that sooner or later all diamonds will likely be authenticated by way of a blockchain community. Nevertheless, she did level out the significance of making certain shoppers haven’t got to fret concerning the technicalities behind NFTs:

“Prospects don’t must have any crypto or blockchain expertise to achieve entry to our NFTs. The whole lot is completed effortlessly for you. I consider it will drive mainstream adoption.”