The evolution of money or currency is a fascinating read. The most primitive form of transacting was barter trade. Its premise was quite simple; the exchange of goods for goods. There was no set value for the items. Indeed it came down to subjective attribution of worth.
The first coins came from the Chinese people in 770 B.C. In 700 CE, they introduced paper money. Mobile payments made an entry in the 21st century.
Then came the newest entry, a digital or virtual currency, in 2009. Thanks to Satoshi Nakamoto, Cryptocurrency took the world by storm. The technology behind cryptos is blockchain. It has had far-reaching effects on all industries, and the jewelry industry is not exempt. Let’s explore the influence of blockchain on this specific market.
Jewelry Traceability with Blockchain
When you buy an expensive piece of jewelry, how can you determine its authenticity? One of the best ways is to trace it back to its point of origin. Let’s take the diamond jewelry industry as an example, to explain our point.
Even with a basic understanding of the industry, you can agree that the supply chain is quite complex. The stones pass through many hands before it gets to you, as the final customer. It comes from the mines as a raw, uncut stone.
Companies or individuals buy them and pass them on to diamond cutters. From there, jewelry designers buy the pieces. Out of these are products like stud earrings, wedding sets, and engagement rings.
The same applies to the best lab-created diamonds. From the labs, they will pass through the same supply chain. Along the way, there can be cases of document tampering. Someone can switch the products with fake ones, and you end up buying.
Blockchain is a perfect type of Distributed Ledger Technology (DLT). Think about it like decentralized databases in the shape of linked blocks. So, the lab or mine is a block. Secondary buyers are another block. Diamond cutters are a different block, and so on. Each block has participants that manage the information within.
The hash or immutable cryptographic signatures ensure no one can alter information. To do so, you must have user privileges. The blocks make it easy to track the diamond’s journey back and forth. Since data tampering is impossible, it becomes possible to authenticate the diamonds.
Greater Transparency and Quick Access to Information
As we stated above, any information that goes into the blockchain is immutable. In other words, it is unchangeable or permanent. The participants within each block can input data without relying on a third party.
The lab-grown diamond creators add information as it pertains to the production process. The following stakeholders in the blockchain do the same, and so on. Secure keys ensure no one within the blocks can tamper or change information. But, they can access the data anytime and anywhere.
Those within the supply chain have the liberty to verify information at any time they need to. They don’t have to pass through third parties to do this. It enhances transparency while ensuring quick access to information.
Further, there is greater efficiency with virtual documentation. No more paper invoices from each stakeholder in the supply chain. Instead, you get tamper-proof, traceable transactions at every stage of the supply chain.
Establishing Trust amongst Customers
Customers who buy high-value jewelry base their decision to transact with you on trust. Think about it for a minute. You are shopping for a diamond engagement ring. The budget will cost you thousands of dollars, which you are ready to spend. How likely is it that you will walk into a jewelry store and leave your money behind?
We can bet the answer would be quite unlikely. You will do thorough research on retailers and read tons of reviews. You may also base your decision to buy on a referral. Indeed, a solid industry reputation is key to the success of jewelry companies.
Blockchain technology provides a way to further earn trust. The transparency the technology affords is critical for the authentication of high-value jewelry. You don’t, for instance, need to rely on the seller’s word that you are buying a Rolex. You can demand access to information in the blockchain to establish the truth of the matter.
Providing such information to customers also passes on another strong message. It signals to the customers a willingness to develop close relationships with them. Indeed, you are letting them into what happens behind the scenes. Talk about a powerful marketing tool without focusing on the product attributes.
Addressing Ethical Issues with Blockchain
The jewelry industry has come under a lot of scrutinies over the years. This is especially true with regard to the diamond industry.
There is an ongoing concern about unethical mining practices. Questions around unsafe work conditions, child labor, health, and fatalities clog the industry.
Blood diamonds have become the reference to war zone diamonds. The proceeds go towards financing insurgencies and warlord activities.
Lab-grown diamonds have also raised some issues. Unscrupulous individuals perpetrate fraud by classifying lab-grown diamonds as natural mined diamonds.
Without transparency in the supply chain, overcoming ethical concerns can be difficult. There will be no way to trace the source or movement within the opaque supply chain. Blockchain provides a fantastic solution for overcoming such limitations. Transparency from the origin, journey, and final destination is clear to see.
No one can interfere with information thus giving more credibility to their records. The permanence of the communication means the data is always available. It doesn’t matter how many hands or marketplaces the jewelry goes through. Anyone who has an interest can refer to the virtual reports. Indeed reports are so specific that they apply to each diamond.
Diamond industry leaders like De Beers already have the Tracr Blockchain technology. The company positions the blockchain software as tamper-proof and provides assurance right from the source.
Blockchain technology within the jewelry industry has so many advantages. Virtual documents provide efficiency, transparency, and quick access to information.
The jewelry industry can establish the authenticity of its items. It provides a fantastic way to get customer trust and loyalty.