Diamonds industry has stagnated for quite some time now, for the following reasons:
1) The consumers are increasingly preferring smaller diamonds in their jewelry, instead of that one large piece of the diamond they preferred earlier. The smaller pieced are often of lower quality and price is lesser. Besides, smaller diamonds effectively reduce the diamond content in the jewelry.
2) The issue of ‘blood diamonds’ continues to dampen consumer sentiments. An increasing number of consumers are wary about whether their diamond was sourced ethically, or slave labor was used in unsustainable mining practices in war-torn countries.
While a stagnating industry typically invests more in marketing, the diamonds industry hasn’t stepped up their investment in marketing noticeably, a factor contributing to continued stagnation.
Given this backdrop, the industry is considering other avenues to effectively push the investment in diamonds up. The partnership of the diamond majors with D1 Mint is to be seen in this context.
D1 Mint has created the diamond-backed cryptocurrency D1 Coin. The company has a pricing algorithm, and it uses standard diamond industry parameters such as shape, carat, cut, and clarity, to determine the price at which an investor can redeem their D1 Coin for a piece of diamond.
As part of the partnership, D1 Mint will purchase 1,500 investment-grade diamonds from KGK Diamonds, which were supplied by the diamond mining company Alrosa. This effectively creates a separate asset class in the investment market, and the interest in diamonds won’t likely be limited to the jewelry aficionados anymore, rather diamonds will now attract investors in securities.
The stakeholders in this partnership, i.e. D1 Mint, KGK Diamonds which is a part of the global giant De Beers group, and Alrosa believe that blockchain can make several positive changes to the industry, converting diamonds into an investment asset class being one of them.
The blockchain technology is making its presence felt in the jewelry industry including diamonds industry, for e.g.:
De Beers has recently used the technology to track 100 diamonds through their entire life-cycle.
Technology giant IBM has partnered with jewelry industry leaders to develop TrustChain, a blockchain-powered solution for supply chain assurance in the jewelry industry.