NFTs could help solve diamond certification fraud

December 13, 2022

By Sharan Kaur Phillora

The billion-dollar diamond industry has seen corruption and theft for decades, with a handful of lab-grown diamonds labeled and certified as natural diamonds. Last year, the international Gemological Institute of America (GIA) analyzed and graded a 6.18ct lab-grown diamond that was previously claimed to be natural.

It was also found that the GIA, in 2005, accepted bribes to upgrade its GIA reports. According to sources, a lawsuit was filed. Additionally, consumers can resubmit diamonds for examination at GIA for any reason, known as a follow-up service. This means a diamond can be associated with multiple grading reports. This can be problematic for consumers as they may not have received the original diamond certificate upon purchase.

With the rise in such fraudulent activities, industry experts have looked to Blockchain Technology to help solve this growing problem.

Diamond Dawn founder and creator Mike Moldavsky told Cointelegraph that diamond certification reports should be placed on a public blockchain network to ensure that the document cannot be manipulated. “Having a certificate of the diamond as an NFT on the Ethereum blockchain can ensure immutability, proof-of-ownership, and visibility for both retailers and consumers,” he said.

He explains Diamond Dawn is a high-end NFT art project that will place 333 GIA-certified diamonds on the Ethereum blockchain as ERC-721 tokens. Privately invited participants will then be able to purchase these diamonds as NFTs.

Participants can buy a range of diamond NFTs with weights between 0.4-0.8 carats for the price of 4.44 ether (ETH). Once the NFT is purchased, a smart contract will automatically send the GIA certificate of the diamond to the Ethereum blockchain, which will serve as proof of ownership and verification.

NFT holders will have the option of creating a tangible piece of art consisting of a GIA-certified diamond via the Diamond Dawn website. “As more collectors decide to claim physical art pieces and burn NFTs, this will reduce the total NFT supply. As a result, digital NFTs will become more scarce,” Moldavsky explained.

Olivia Landau, a GIA-certified gemologist and co-founder of The Clear Cut — a digital native diamond engagement ring and fine jewelry company — told Cointelegraph that her firm is working on diamond certification after launching an NFT platform on the Authenticated Blockchain network. using NFTs for In January.

He said, “NFTs give couples purchasing an engagement ring the option of securely storing all diamond certificates, insurance, images, and even the story of their proposal on the blockchain for years to come, eliminating the need for paper copies. The worry of difficulty in changing is eliminated.”

“In the beta testing phase, over 90% of customers expressed initial interest in this new NFT function. Customers will receive a hard copy of their GIA certificate, and a copy of it will be stored digitally, ensuring its value for life,” she said.

GIA communications director Stéphane Mauricio told Cointelegraph that beginning next year, the GIA will begin converting all of its gemological laboratory reports into digital forms. “It should be completed by 2025,” he remarked. Mauricio said that all of GIA’s printed reports have several security features, noting that the information in any report can be verified using the secure online GIA Report Checking Service.

NFT adoption within the diamond industry may also gain traction once mainstream retailers implement the technology. Landau believes that in the future, all diamonds will be certified via a blockchain network. However, she noted the importance of ensuring that consumers do not have to worry about the technical aspects behind NFTs.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.

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