Although diamonds are a girl’s best friend, the billion-dollar diamond industry is riddled with controversy and fraud. A number of situations have occurred in which lab-grown diamonds have been graded as natural diamonds. Last year, the International Gemological Institute (IGI) evaluated and graded a 6.18ct lab-grown diamond that had previously been claimed to be a natural diamond on its Gemological Institute of America (GIA) report.
In 2005, it was also revealed that the Gemological Institute of America, one of the most reputable sources for assessing gemstone quality, was taking bribes to boost its GIA assessments. According to reports, a lawsuit was brought against the GIA in 2005 as a result of money collected to “improve” the quality of diamonds submitted for grading.
Furthermore, customers can resubmit a diamond for evaluation at GIA for any reason. This is referred to as a follow-up service. As a result, diamonds might have various grading reports linked with them. This might be troublesome for customers since they may not receive original diamond certifications at the time of purchase.
Unfortunately, diamond certificate fraud is on the rise. Regions such as India have even created new structures to prevent fraudulent operations, as seen by the Diamond Charter, which was drafted last year. While creative, industry professionals have begun to look to blockchain technology to assist in solving this developing challenge.
Nonfungible tokens (NFTs) in particular may provide a solution for combating diamond certification fraud. Diamond certification reports, according to Mike Moldawsky, founder and inventor of Diamond Dawn, should be posted on a public blockchain network to ensure that papers cannot be changed. “Having a diamond certificate as an NFT on the Ethereum blockchain ensures immutability, proof-of-ownership, and visibility for both retailers and customers,” he explained.
Moldawsky added that Diamond Dawn is a high-level NFT art project that would deploy 333 GIA-certified diamonds on the Ethereum blockchain as ERC-721 tokens to illustrate this. Participants who have been personally invited will then be able to purchase these diamonds as NFTs. Moldawsky claims that participants will be able to acquire a maximum of one diamond NFT weighing between 0.4 and 0.8 carats for the price of 4.44 Ether.
When an NFT is purchased, a smart contract will immediately submit the diamond’s GIA certificate to the Ethereum blockchain, proving ownership and verifying ownership.
Given the growing popularity of NFTs with physical counterparts, Moldawsky added that NFT holders will be able to create a tangible art piece containing a GIA-certified diamond through the Diamond Dawn website.
“NFT holders will begin with a digital rough diamond and evolve their NFT on the blockchain (on-chain) through a process that exactly mirrors the natural diamond process.” Finally, the collector must decide whether to keep their diamond digital or burn it and transform it into its physical form,” he explained.
According to Moldawsky, such a method is also intended to create awareness about the idea that digital NFTs might become rare and hence more valuable over time. “As more collectors opt to claim the tangible art piece and burn the NFT, the overall quantity of NFTs will be reduced.” As a result, Moldawsky believes that digital NFTs will become increasingly scarce.
He went on to say that the digital diamond artworks were all produced by artist David Ariew, who just sold his first piece at Sotheby’s Contemporary Art Evening for $224,000, among notable artists like Banksy and Basquiat.
Moldawsky, on the other hand, emphasised that Diamond Dawn’s diamond certifications will stay on the Ethereum blockchain. “If a user decides to construct a tangible diamond art piece, they will obtain both the paper GIA certificate and the blockchain network certification.” “The project’s goal is to demonstrate diamond certificate proof-of-ownership, transparency, and immutability,” he explained.
Olivia Landau, a GIA-certified gemologist and co-founder of The Clear Cut, a digitally native diamond engagement ring and fine jewellery company, told Cointelegraph that her company, which launched an NFT platform on the Authentic blockchain network in January, is also using NFTs for diamond certification. She stated: “NFTs allow couples purchasing an engagement ring to have all of the diamond’s certifications, insurances, photographs, and even their proposal narrative safely saved on the blockchain for years to come, removing the burden of clinging onto hard-to-replace paper copies.”
The Clear Cut’s NFTs, according to Landau, are designed to scan and authenticate a diamond’s GIA report and insurance documentation. “The Clear Cut’s NFTs are not meant to be resold on secondary markets,” she explained.
Clients who purchase a diamond ring from The Clear Cut will have the option of purchasing a comparable NFT for an extra $500, which will be paid in fiat rather than crypto, according to Landau. She also mentioned that existing consumers will have this choice.
“Over 90% of clients indicated initial interest in this new NFT feature during the beta testing phase,” she added. “Customers will receive a hard copy of their GIA certificate and a duplicate of it will be preserved digitally, insuring its worth for life.”
Although NFTs as digital diamond certifications are novel, it is unclear whether this notion will catch on with the general public.
Moldawsky, for example, stated that he feels more blockchain education is required for traditional enterprises to appreciate the potential of NFTs. “We need to question GIA about why they haven’t gone digital yet.” “Once that dialogue begins, we will be able to explain why blockchain technology is disruptive,” he says.
While this is true, it is worth noting that GIA is receptive to digital change. GIA’s head of communications, Stephen Morisseau, told Cointelegraph that the organisation would begin digitising all of its gemological laboratory reports early next year. “This should be finished by 2025,” he said. Morisseau went on to say that all of GIA’s printed reports include many security safeguards, and that any report’s information may be validated using the secure online GIA Report Check tool.
Adoption of NFTs in the diamond business may gain pace as mainstream shops begin to use the technology. De Beers, for example, is now utilising the Tracr blockchain to track the provenance of its gems.
Tracr’s chief product officer, Jason McIntosh, told Cointelegraph that NFTs are likely to be included in the platform’s solution in the future. “Diamonds on the Tracr platform are ‘NFT-ready,'” he explained, “in the sense that the Tracr diamond record can simply be included into an NFT wrapper.”
Given this degree of advancement, Landau expects that all diamonds will be certified via a blockchain network in the future. She did, however, emphasise the necessity of ensuring that customers are not concerned about the technical elements of NFTs: “Customers do not need to have any crypto or blockchain experience to obtain access to our NFTs.” Everything is handled smoothly for them. This, I believe, will drive mainstream adoption.”
The Gemological Institute of America (GIA) developed diamond certification to assess the quality of a diamond based on the 4Cs—carat, colour, clarity, and cut. Diamond certification is also known as diamond grading, and it is strongly advised that couples only purchase certified diamonds.
A diamond certificate provides confidence regarding the attributes and worth of your one-of-a-kind gemstone and acts as confirmation of identity. Finally, it is important to conduct research before purchasing a diamond and to do so from a trustworthy jeweller.
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