(Bitcoin is a Cryptocurrency that may one day replace the US Dollar as the international standard)
Crypto currency, including Bitcoin, has been making headlines for almost a decade, since it was first conceived by a mysterious programmer in 2009. However, its uptake in the jewellery and gemstone industry has been rather slow. It is often said that gemstones conjure images of beauty, love and luxury but there is also an unscrupulous side to the production of many stones. So called "conflict" or "blood" diamonds have been well reported in the media and have even found their way into Hollywood movies. To compound this, synthetic diamonds and coloured gemstones have entered the marketplace in increasing volumes over recent years and chemical, heat and irradiation techniques to enhance the colour and/or clarity of a gem have vastly improved, making it harder to distinguish natural stones from artificial and untreated from treated. The search for a mechanism to ensure the "conflict" free nature of a gemstone produced the United Nations Kimberly Process in 2000 but this has largely been discredited as a window dressing exercise that has failed to truly stamp out the use of gemstones as a method of funding civil war, corruption and organised crime, which is most prevalent in Africa. A possible technological solution to this problem has been presented by the "blockchain," a software system that powers Bitcoin and many other Cryptocurrencies. At the centre of the blockchain process lies an indelible, tamper-proof ledger that may make it possible to trace a stone along the length of its (often rather convoluted) supply chain.
(Bitcoin is now making its presence felt in the gemstone and jewellery industry)
Bitcoin is already set to transform the record-keeping of a number of industries, including shipping, insurance and finance, but it is in the gemstone business that it has the potential to have the greatest ethical impact. This process is well underway as, for example, London based Everledger have already listed over 1.6 million gemstones on a blockchain. This entails the recording of a number of characteristics of each stone, including the four 'C's' (cut, colour, clarity and carat), as well as its laboratory certificate number, which is laser etched on the crown or girdle of the gemstone itself for foolproof identification. In the words of Leanne Kemp, CEO of Everledger, "we create a digital twin of the object on the blockchain," which enables stone suppliers, border agents, customs officials and dealers to replace the traditional (and highly unreliable) system of paper certification and documentation accompanying each shipment. As well as improving traceability and accountability, this system also enhances the efficiency of the overall distribution. This is achieved by enabling hand held scanners to instantly determine the provenance of any stone via what Kemp refers to as a "digital vault," or in other words a database that is searchable within seconds. Everledger are pioneering the application of Crypotcurrency technology specifically to industrial supply chains. The aim is to put the consumer in a position whereby he or she can determine the provenance of a stone in a shop with a the simple click of a smart phone app.
(Blockchain promises to revolutionise the traceability of a gemstone's provenance)
Everledger are also employing this groundbreaking blockchain technology to trace other luxury products back to source. One such example is fine wine, a product that has exploded in value over the past ten years. Here they facilitate the tracking of vintage bottles by utilising hidden codes added to them by vintners, enabling anyone with an app to cross-reference the bottle with the blockchain to see which vineyard it was produced in and how it was distributed, right through to the final point of sale. Other applications include fine art, which is made immensely challenging by the fact that even very small inscriptions can be seen to damage the art work. It is also being applied to museum pieces and other archaeological artefacts, the origins of which are of vital importance, and it may have a future role helping to combat the illicit global trade in ivory. This demonstrates the breadth and depth of the application of blockchain technology to revolutionise the way we move and track all manner of goods around the world. Many of the emerging markets are showing great interest in this new technology including Singapore, where a new digital trade corridor is being set up for high value commodities. The aim is to increase the speed and accuracy of the movement of goods, as well as boosting consumer confidence by transparently displaying their true origin. The application of blockchain tech to an ever increasing array of goods is fast approaching a tipping point, after which virtually all merchants may feel compelled to utilise it.
(Samer Hallimeh are the first fine jeweller to price pieces in Bitcoin as well as national currency)
The first gemstone dealer to fully embrace Cryptocurrency was international diamond jewellery brand Samer Halimeh, New York, USA, who are now using Bitpay for its merchant services, Bitcoin wallet and Bitcoin supply for trading. For the uninitiated, Bitcoin is a digital currency which can be transferred via any internet connection, facilitating direct transactions between buyer and seller, without the need for a bank, clearing house or other intermediary. Specialist foreign exchange (FX) brokers and dealers around the world execute the transfer of Bitcoin into US Dollars, Euros, Pound Sterling and many other currencies. They are then held on a individual's, or a company's, digital Bitcoin 'wallet,' which is accessible from any internet connected device. Samer Halimeh now price their items in Bitcoin as well as national currency and they have reported a significant increase in Arab and South East Asian customers purchasing in Cryptocurrency rather than USD (the traditional 'go-to'). An increasing number of high (and ultra high) net worth individuals are looking to diversify some of their Bitcoin exposure into hard, high value assets, locking in the profit they have made from Bitcoin's rise and hedging against any retracement. As well as reducing the cost of transactional fees versus national currency, Cryptocurrency also reduces the FX cost when paying for items in international currencies. It is clear that Bitcoin and other Cryptocurrencies are here to stay and it is likely that the increased competition they offer to the traditional banking sector can only be an advantage to consumer and supplier alike.
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