Based on my experience in diamond industry, today I wanted to share some thoughts with you on what issues the diamond industry faces and how decentralization can push forward such an old and undeveloped industry.
The first major issue facing the diamond industry is the lack of credit for the rare stones. There has traditionally been no standardized procedure for pricing diamonds, meaning any transactions were done the old-fashioned way – hand-to-hand between dealers. This limited the scope of diamond trading. One needed to overcome the high knowledge and capital threshold to even think of buying the gems. This lack of standardization also left the market ‘wild’ with scams and faulty monetary transfers common.
The decentralized technological innovations solve these problems. One of such innovations today is Carat.io. By developing a sophisticated price evaluation algorithm, they have paved the way for the creation of the first diamond index, the DFX, which is already being used and quoted on major investing sites. Then, their blockchain platform comes in. With the prices now standardized and automated, traders can now make transactions in a secure, transparent way.
A second major issue with the traditional diamond industry is the lack of a financial market for the commodity. With diamonds being passed between the hands of dealers worldwide, it was impossible to assess the true state of the industry, preventing any accurate analysis or predictions. This left the diamond dealers extremely vulnerable. They had little idea about how much their diamonds were actually worth, and were unable to hedge their stocks and protect themselves from losses. Today the decentralized innovations are establishing a market structure for the industry that will completely change all of this. With a formal index, standardized prices and a platform for external and global investments, diamonds will now be a safe and lucrative asset to invest in.
