NFTs can help solve fraud in diamond certificates

Diamonds may be a girl’s best friend, but unfortunately, the billion dollar diamond industry is riddled with scandals and scams. There have been a number of cases where lab-grown diamonds have been classified as natural. An example of this was seen last year when the International Gemological Institute analyzed and gradual A lab-grown diamond measuring 6.18 carats, which was previously claimed as a natural diamond in a Gemological Institute of America (GIA) report.

was too mentioned In 2005 it was reported that the Gemological Institute of America – one of the most trusted sources for evaluating gem quality – was accepting bribes to update its GIA reports. According to sources, a lawsuit was filed against KIA in 2005 for accepting payments to “upgrade” the quality of diamonds submitted for classification.

Additionally, consumers may resubmit diamonds for examination at KIA for any reason. This is known as a follow-up service. As a result, diamonds can be associated with multiple appreciation reports. This can be a problem for consumers because they may not receive genuine diamond certificates upon purchase.

NFTs as the only source of truth

Unfortunately, fake diamond certificates are becoming more and more common. Regions like India have developed new frameworks to combat fraudulent activities, as we saw with the Diamond Charter drafted last year. While the industry experts are innovative, they are also starting to look into blockchain technology to help solve this growing problem.

specifically speaking, Non-fungible tokens (NFTs) It may act as a solution when it comes to preventing counterfeiting of diamond certificates. Mike Moldowsky, founder and creator of Diamond Dawn, told Cointelegraph that reports of diamond certificates should be placed on a public blockchain network to ensure that the documents have not been tampered with. “Having a diamond certificate as an NFT certificate on the Ethereum blockchain can ensure immutability, proof of ownership, and visibility for both retailers and consumers,” he said.

In order to prove this, Moldawsky explained that Diamond Dawn is a high-tech NFT project that will place 333 GIA-certified diamonds on the Ethereum blockchain as ERC-721 tokens. The invited private participants will then be able to purchase these diamonds as NFTs. According to Moldawsky, participants will be able to buy one NFT diamond border, weighing between 0.4-0.8 carats, at a price of 4.44 ether (ETH). Once an NFT is purchased, the smart contract will automatically send the GIA Diamond Certificate to the Ethereum blockchain as proof of ownership and verification.

due to height NFTs are linked to their physical counterpartsMoldawsky further noted that NFT holders will have the option to create a tangible art piece containing a GIA-certified diamond via the Diamond Dawn website.

“NFT holders will start with digital rough diamonds and develop the NFT on the blockchain (on-chain) through a process that accurately mimics the process of real-world natural diamonds. Ultimately, the collector will need to decide whether they want to keep the diamonds digitally or burn and convert them to their physical form.”

According to Moldowski, this process is also intended to raise awareness around the idea that digital NFT technologies can become scarce over time, and therefore more valuable. “As more collectors decide to claim physical art and burn NFTs, this will reduce the total NFT supply. As a result, digital NFTs will become more scarce,” explained Moldowsky.

He added that the digital diamond artwork was created by artist David Ario, who recently sold his first artistic work at Sotheby’s Contemporary Art Evening for $224,000, along with famous artists like Banksy and Basquiat.

My collaboration piece with Jia Aili, “The Road Ahead” has sold for $224,000 in the US @tweet Contemporary Evening Auction! I’m at a loss for words. Thank you very much @tweet And a huge congratulations to @tweet like that! You guys are incredible!! pic.twitter.com/oeff7zUuku

– David Ariew (@DavidAriew) April 27, 2022

Either way, though, Moldawsky made it clear that Diamond Dawn’s diamond certificates will remain on the Ethereum blockchain. “If a user chooses to create a diamond art piece, they will receive a paper GIA certificate in addition to the certificate on the blockchain network. The aim of the project is to establish the ownership, transparency and immutability of diamond certificates.”

Olivia Landau, a GIA-certified gemologist and co-founder of The Clear Cut — a digitally authentic diamond engagement ring and fine jewelry company — told Cointelegraph that her company is also using NFTs for diamond certification after launching an NFT platform on the Authentic blockchain in January. She said:

“NFTs give couples who buy an engagement ring the option to have all of their diamond certificates, insurances, photos and even their proposal story securely stored on the blockchain for years to come, eliminating the worry of holding onto hard-to-replace paper copies.”

Landau added that the purpose of the NFTs offered by The Clear Cut is to digitize and certify the GIA’s report and insurance policies for diamonds. “Clear Cut’s NFT products are not intended for resale in secondary markets,” she said.

According to Landau, customers who purchase a diamond ring from The Clear Cut will have the option to purchase an NFT for an additional $500, which must be paid in fiat instead of cryptocurrency. She noted that existing customers will also have this option.

“In the beta testing phase, more than 90% of customers have expressed initial interest in this new NFT functionality. Customers will receive a hard copy of their GIA certificate and a copy of it will be stored digitally, ensuring its lifetime value,” he said.

Will NFTs replace traditional diamond certificates?

NFTs such as digital diamond certificates may be innovative, however it remains questionable whether this concept fits into the mainstream.

For example, Moldawsky noted that he believes more education is needed about blockchain so that traditional organizations can understand the potential behind NFTs. “We need to ask the GIA why they haven’t gone digital yet. Once we start this conversation, we can explain why blockchain technology is going digital.”

Although this may be the case, it is worth noting that GIA is open to digital transformation. Stephen Morisot, director of communications for the GIA, told Cointelegraph that early next year, the GIA will begin porting all gem lab reports into digital forms. “This should be completed by 2025,” he noted. Moreso added that all GIA’s printed reports have several security features, noting that information in any report can be verified using online security. GIA Report Inspection Service.

The adoption of NFTs in the diamond industry may gain traction once mainstream retailers start implementing the technology. For example, De Beers is currently using the Tracr blockchain for Trace the origins of diamonds.

Jason McIntosh, chief product officer at Tracr, told Cointelegraph that NFTs are likely to be part of the platform solution in the future. “The diamonds on the Tracr platform are ‘NFT-ready’ in the sense that the Tracr diamond registry can easily be integrated into an NFT shell,” he said.

Given this level of innovation, Landau believes that in the future, all diamonds will be authenticated via the blockchain network. However, she noted the importance of ensuring that consumers don’t have to worry about the technicalities behind NFTs:

“Customers do not need to have any crypto or blockchain expertise to access our NFTs. Everything is handled effortlessly for them. I believe this will lead to mainstream adoption.”