Diamonds Are A Blockchain’s Best Friendbr>
Diamonds form an industry worth north of $80 billion. However, it is fragmented, with high transaction fees (up to 5%), an inefficient payment system between professionals, and a high barrier of entry for new investors.
In order to address these issues, Hello Diamonds has become the first company to issue a diamond-backed coin on a blockchain, the DiamCoin. The DiamCoin reduces transaction fees to only 1%, allows investors to buy fractions of a diamond, and is completely backed by diamonds, lessening volatility.
Hello Diamonds CEO Jeremy Dahan talked with Block Tribune about the sometimes secretive business and its transition to the blockchain.
BLOCK TRIBUNE: How big an issue is provenance to the diamond industry? We always see film and TV plots centered around “blood diamonds.” Is that exaggerated, or is it a major industry problem that blockchain might solve?
JEREMY DAHAN: Provenance has always been an issue in the diamond industry. Due to the nature of diamonds, the fact that they can be so small but very valuable means that people can travel with small bags of diamonds worth millions, making it ideal for those that wish to move their wealth around. We do not doubt that the diamond industry has its issues, therefore we firmly believe that blockchain is a tool to combat provenance.
BLOCK TRIBUNE: Has fractional investing in diamonds existed before in some form?
JEREMY DAHAN: No. As far as we are aware, fractional ownership of diamonds has not been possible before. Diamonds are one of the few commodities that does not have ETFs.
BLOCK TRIBUNE: What affect will the entrance of blockchain have on the diamonds industry?
JEREMY DAHAN: Once a technology like blockchain is applied to the diamonds industry, this opens up a lot of doors for new opportunities. One of our main goals is to make diamonds more easy for people to understand what their real value is. Currently, even though many people buy diamonds for their marriages for example, they are not 100% certain of the value of their diamond. This is because the value of a diamond is set by different factors such as cut, clarity, depth, colour etc. As such, we wish to make it transparent and clear to people what the value of each diamond in our itinerary is and why it has that value, so that people can confidently buy and sell them. This way, making the already existing unified standard of valuing diamonds, easily understood in layman’s terms.
BLOCK TRIBUNE: A good deal of the diamonds industry, at least among certain concerns, is private and clannish. Will they want to adopt blockchain and expose their practices?
JEREMY DAHAN: Currently, the diamond industry is facing some major problem, mainly when it comes to banking. There are only three banks in the world that will do business with diamantaires. As such, a move to upgrade the industry with blockchain technology we believe will be welcomed. Having a wallet address will be the equivalent of having a bank account for diamonds, but without having to go through banks!
BLOCK TRIBUNE: Since a certain percentage of diamonds are already mined and in private hands, what affect will your blockchain have on them?
JEREMY DAHAN: The effect that blockchain will have on them, is that they will have the option to connect to our network and sell their diamonds if they wish to. On the other hand, if they wish to continue keeping their diamonds private, we believe we will not have any effect on them.
BLOCK TRIBUNE: Will there be any added regulatory pressure – or, vice versa, a lessening of same – by implementation of the blockchain?
JEREMY DAHAN: We believe that there may be less pressure to regulate. This is mainly because of the nature of blockchain. DLTs are transparent and shared, therefore a level of transparency and accountability that has never been seen before will be ushered into the diamond industry. Regulatory authorities usually aim to make sure that businesses are accountable for and that there are no hidden secrets from their eyes. On the other hand, even if the pressure to regulate increases, that still is not an issue, as blockchain can be seen as a tool for regulation because of the accountability and immutability traits it has.
BLOCK TRIBUNE: How does your company make money?
JEREMY DAHAN: In order to set up our business, we have some expenses. For these expenses to be covered, we will be charging a small percentage fee on each transaction.