De Beers building blockchain to track diamonds from mine to customer

The platform, known as 'Tracr', is based on Etherium blockchain technology
De Beers is building the first end-to-end diamond industry blockchain platform that will securely track a diamond from the mine to the end consumer.

The platform, known as 'Tracr', is based on Etherium blockchain technology and is being built in collaboration with the industry players.

'Tracr' is being designed to benefit all diamond industry stakeholders - from large producers to small businesses - including the Indian diamond sector, which processes the majority of the world’s diamonds. 

The pilot was launched in January, to trial it with a small group, which also included Indian Sightholders.

"The project will cover the full diamond value chain -  from the mine to the end consumer - providing consumers with confidence in the product, the trade with increased efficiency, and lenders to the industry with greater visibility," said Feriel Zerouki, Senior Vice President, International Relations and Ethical Initiatives, De Beers Group.

De Beers is working with BCG Digital Ventures to build the platform and the underlying technology.

Deepak Gopalakrishna, Director, Global Blockchain Projects, BGG Digital Ventures said that the platform also has a privacy technology to protect participants data. "It keeps data private and allows participants to selective share data with only those that they want to," he said.

A rough diamond will be registered on the blockchain at the mining stage, then recorded as it is sold to Sightholders, and from there - as it travels to cutting and polishing units, and onto the retail stage. Each transfer will be registered on the blockchain until it is sold to the consumer, with Tracr creating a permanent and immutable record of a diamond journey.

The Tracr team is designing integration solutions that will allow small and mid-size diamond cutting and polishing units to integrate onto the platform. Each participant would have to go through KYC checks before joining to protect the integrity of the platform and to minimise any potentially nefarious behaviour. 

Among Indian names figuring in the pilot project participants are Venus Jewells and Rosy Blue (New York). De Beers has already sent messages to other diamond mines, small or big, to join the blockchain which will be an industry initiative.

This blockchain will make the industry transparent and virtually risk-free. Risk of duplicate or synthetic diamonds mixed with the original will also be eliminated. Consumers will get the exact product that they have to buy.

"Some 60 per cent of the Indian diamond industry is in the informal sector. Because Indian stakeholders are extremely important for us, we are committed to making sure that players from India's formal and informal sectors alike can benefit from Tracr. We will work closely with the Indian industry stakeholders to help them integrate," Zerouki said.

She said that although the initial focus of the Tracr pilot has been on the rough diamonds greater than 10.8 carats, the team have already started tracking some of the 5 to 10.8 carat rough diamonds.

"..and we plan to expand this to 2-5 carat rough diamonds in the coming months," she said.

The team is also using data science and physical identification techniques to develop a unique solution that will match a diamond's physical properties to its digital record to ensure its authenticity.

Once the small and informal sector agree to join, blockchain Tracr will require common criteria to integrate them, especially for informal sector and smaller units. The integration may be a big challenge. 

However, Anoop Mehta, President, Bharat Diamond Bourse, a Mumbai hub for diamond trade and industry at BKC, said that blockchain was a good idea in long run.

"However, it should help all reducing their administration-paper work and cost of it.” The administration cost and time-saving could be a deciding factor for smaller units to integrate with the blockchain," he said.

The second challenge will be maintaining buyer-seller confidentiality. De Beers claims that the project is prepared with the privacy control given to user about what share and with whom.

The real benefit to all in the diamond value chain will be seen only when all mines, especially major mines, join the project. Else those working on a diamonds purchased from mines which are not part of the blockchain will have to keep separate records.

There will be some cost of joining blockchain. The exact costs are yet to be established. Feriel said the team is working on how to minimize these costs for small and unorganised units to ensure minimal impact so that everyone can benefit from the platform.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel