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Can Blockchain technology transform the gold and diamond industry? A consortium of responsible and ethical organizations across the jewelry industry say “yes.”
The economics of how products and materials moved used to be a world away in the minds of many people. Time and distance not only absolved them of knowledge of the conditions under which materials were harvested, produced and transported but limited communication capabilities made it virtually impossible for any one person to understand the complexities and ethical challenges of far-flung suppliers.
Leap forward to the 21st century and the connected age sees consumers, governments and organizations demanding greater detail about a product’s journey. From origin to destination, people want assurances that the products they buy and consume are authentic, safe and did not hurt the environment or the workers who put it together.
Fortunately, innovative solutions like blockchain technology are set to change the supply chain landscape. One group poised to take advantage of the capabilities in blockchain technology is a global consortium of leading diamond and jewelry companies.
Recognizing the need to add more transparency and simplicity into the jewelry ecosystem, founding members—Asahi Refining, Helzberg Jewelers, IBM Corporation, Richline Group, and UL—started discussions in 2017 to learn how blockchain technology could be leveraged to build trust throughout the entire jewelry supply chain.
Blockchain, a distributed database that stores identical blocks of information across its network, seemed the most promising solution to the industry’s complex chain. With blockchain technology, users may access, inspect or add to the data but not change or delete a validated entry after it’s recorded, making the technology tamper-resistant. Every time a product or item changes hands, the transaction is documented, creating a permanent history of a source, product or shipment, from beginning to end.
Blockchain historically operated through an open source system or a public network, but can also be accessed through private networks. Known as closed blockchain, it is a private network with a shared record of transactions available only to those who have access rights granted by the network’s administrators.
After months of deliberation, testing and digital and physical oversight, the consortium introduced the TrustChainTM Initiative, a transparent ecosystem built on a closed blockchain network and powered by IBM’s blockchain technology.
TrustChain offers the industry an end-to-end solution by showing the movement of diamonds and precious materials throughout the supply chain lifecycle. Partners digitally stamp items at each stage of the journey, from a raw diamond unearthed in a remote mine to a finished, piece of jewelry displayed in a retail outlet.
Additionally, the TrustChain platform has the potential to transform the way the industry does business by removing duplication of paperwork, simplifying invoices and speeding up the fulfillment of orders.
Record inspections and on-site, factory audits provide an additional layer of oversight for the process. UL will act as the TrustChain administrator and will provide the physical verification and monitoring of the data entered into TrustChain.
The TrustChain program is still under development. However, a pilot including six styles of diamond and gold engagement rings have already been fully tracked on the blockchain. Products followed through the program should be available by the end of 2018 and the consortium is anticipating that TrustChain will fully launch in 2019 for industry participation, according to Marla Hedworth, business development manager with UL.
“As a founding member and part of the consortium creating TrustChain, UL is proud to join IBM, and these leading organizations within the diamond and jewelry industry to develop an industry-wide solution that brings together Blockchain’s digital verification with responsible sourcing, physical product and process verification and third-party oversight and governance.”