Recently, it was reported that the blockchain company, D1 Mint Limited has actually signed a concrete agreement to purchase 1,500 genuine diamonds with a value of $20 million from KGK Diamonds, which is a large Diamond industry player.
Such an agreement could signal further trust being placed in crypto firms that claim to offer currencies that are tethered to more traditional, stable assets such as diamonds, gold and others.
Alrosa, the firm which apparently supplied the uncut diamonds to KGK and is also involved in the deal, stated that they believe in the Blockchain’s ability to change the “precious gem industry” for the better. Precisely, they believe that putting diamonds on the Blockchain will kick up demand significantly.
This agreement comes in the face of difficulties that the diamond industry has been facing with regards to demand for diamonds from retailers. Apparently, for 4 years, global customer purchases of diamond-based jewelry have stayed at a constant level. In other words, customer demand hasn’t risen and it hasn’t fallen.
To begin to increase demand, D1 will be tethering their diamonds to a proprietary crypto coin called D1 coin. When customers purchase D1 coins, they can eventually redeem their stake for actual, physical diamonds. To decide how much a customer gets, D1 uses an internally developed pricing algorithm. While specific information does not seem to exist on how this algorithm works, one can reasonably assume that turning one’s crypto in for diamonds won’t be cheap.
Even so, it will show a different group of investors, that it is at least theoretically possible for anyone to invest in such an asset class. It’s also important to note that even with this novel agreement between D1 and KGK, the diamond industry isn’t done with the Blockchain.
They’re reportedly also seriously exploring Blockchain-based options to improve their supply chain and this includes working with big players like IBM. As D1 moves past its ICO and into being live, it will be interesting to see how their vision comes into being. Be wary, however that as of now, they are refusing to release their white paper to US citizens, Chinese citizens, and residents of Singapore.
By: BGN Editorial Staff