Boosting confidence in the diamond trade by overcoming the last great hurdle of guaranteed provenance is no small task, but the daunting scale of the job at hand has not deterred Leanne Kemp, CEO and founder of British tech start-up Everledger. Combining the blockchain technology underpinning Bitcoin with HD photography and specialized applications, the company records 40 metadata points to create a unique thumbprint of each stone.
Since its inception two years ago, Everledger has been in the process of creating a database for tracking the origin of diamonds, and has already recorded approximately 1.5 million diamonds. The greatest interest thus far has come from insurance companies and banks, but the diamond trade is now listening to her proposal as well, as they see the use being made of blockchain tech as a way not only to eliminate the last vestiges of fraud in the industry, but of unlocking much-needed finance and potentially bringing banks back to the trade.
As Pamela Ambler writing for Forbes explains, "In the insurance sector, fraudulent claims for lost jewelry have resulted in billions in losses each year." As Leanne Kemp tells her, “We see document tampering where one stone has been claimed across similar timelines with multiple insurers." She compares the tech ledger to “a forensic view like dental marks or iris scan."
Speaking with Pieter Suy from Belgian daily De Tijd, Kemp says, "We not only note the external characteristics of a diamond, such as height or weight, but go further in our scientific analysis of the stone by using HD photography or techniques such as spectography. Ultimately, the identity of the diamond is placed in our system in the form of a computer code. If the diamond changes owners, the code is adjusted.” Her technology thereby aims to verify the authenticity, provenance, and custody of diamonds using a single source across the supply chain.
Proponents agree that this type of disruption - the kind that increases transparency - is just what the diamond trade needs. Kemp explains, "Diamond trading is still conducted on blind faith. Whoever buys a diamond receives a certificate which shows, among other things, how many carats the stone is. The trust placed in that certificate is very great, while sometimes stolen or synthetic diamonds are being sold using false documents. Much of our work at Everledger consists in mapping out all the relevant data about a diamond and storing it in a public network. By securing everything with cryptography, the information cannot be altered.”
A critical aspect of this is that the information is not stored in a central database. “We work together with other players in the business. Companies that create certificates, others that package diamonds, and so on. Everyone plugged into the network conducts checks on a regular basis. This way of working is of course not only applicable to diamonds. We also apply it to projects for art and luxury watches.”
These days Kemp travels around the world explaining how Everledger can change the diamond trade with blockchain technology. This is how she inspired the Antwerp diamond industry to set up a blockchain project to clean up its image. But Kemp also has a message for those who think that blockchain alone is some kind of magic potion. "Companies that focus only on that blockchain are going about it the wrong way. Blockchain is important, of course. But actually it is nothing more than the framework on which one can build promising new applications. You can only do really great things if you combine the technology with other innovative things like artificial intelligence, robotics, you name it. Only then can you make a difference using blockchain.”
Asked whether customers will be able to walk into a jewelry shop and scan a diamond on display with our smartphones, she says, “That is indeed the intention. Early next year we want to bring technology on the market that will make this possible. But we are not going to develop such an app ourselves. We kind of function like a chip maker - ‘Intel inside’ is now on every pc as a quality label. Basically, we’re just a group of nerds working behind the scenes and concerned about the world.”
Photo: Everledger founder & CEO Leanne Kemp in the Antwerp diamond district. Photographer: Wim Kempenaers, De Tijd
Source: The Diamond Loupe