What is the most valuable thing you can think of that is not publicly traded, yet still classified as a traditional asset? For many, especially those with a background in investing, diamonds likely come to mind.
To understand why this is important for the blockchain industry, it is important to understand the recent news surrounding the trading platform called CEDEX. First, CEDEX has secured around $50 million in diamonds in preparation for the launch of its’ “diamond ETF.”
Second, and even more importantly, they have publicly stated that they will be the first to make diamonds a tradeable asset. In the event that you find yourself scratching your head here, you are surely not alone in this respect. CoinDesk reports that this is due to CEDEX’s in-house trading algorithm as well as simply because of the fact that it is using the blockchain.
Overall, CEDEX’s goal is to use their exchange to create an entirely new market. On their site, they attempt to clarify the claim that the blockchain has enabled them to create this market by relating all of their efforts to facilitating liquidity that could not have been facilitated before.
For those of us who are already crypto investors, this claim is nothing new. The blockchain facilitates liquidity like never before, simply because of how fast it allows assets to be traded. Even so, is this enough of a foundation to claim that a new market has been created?
Certainly, all diamonds included would have to be tracked from their sourcing to their placement on the CEDEX exchange or credible claims could be made that some of them are conflict diamonds. Given that they have publicly said they have overcome any sort of transparency issues in this respect, it would appear that this will not be a problem.
Even so, exercising caution with regards to such an endeavor would be a good rule of thumb. CEDEX is basically a decentralized exchange to allow diamond holders of any kind to directly trade with interested investors. Since they appear to have no plans to implement any sort of know-your-customer requirements, there is really no way to know who these people will be.
By: BGN Editorial Staff