GemIdentity Case Study

A global registry built on Blockchain for authenticating & tracking the provenance of diamonds.

Background:

The global diamond market size was pegged at roughly US$87.31 billion growing was predicted to grow at a CAGR of 3.0%.  The main reason for this forecast is the increasing demand from emerging economies in the Asia Pacific like India & China.  In a survey conducted by Bain & Company in the year 2020, it was noted that Diamonds continue to be a gift that everyone looks forward to and is a key to happy occasions like a marriage. In fact, the study also points to consumers who have said that they would spend equal or more amounts on diamonds post-pandemic which shows that diamonds have a strong emotional connection.

Challenge:

For every valuable object in the world, there is a record of ownership.  Vehicles have the Department of Motor Vehicles, Homeowners, have the Property Registry office tracking provenance.  But when it comes to Diamonds, there is no global registry where the ownership of diamonds could be attributed.  Details of the manufacturer, retailer, or for that matter the purchaser of the diamond are not really captured cohesively.  A global registry would help consumers know that the diamond on your finger is ethically sourced along with its origin & movement through the value chain.

Solution:

What the industry needed is a cloud-based trustworthy, the global system of record for precious stones such as diamonds to prove the origin and ownership from the mine to the finger. A solution that not just addressed manufacturers & wholesalers but everybody in the value chain including retailers and consumers as well.

To ensure that the value of the diamond, its provenance etc., was clear to the manufacturers, retailers & consumers, NetObjex came up with the following solution & built GemIdentity:

  • Every diamond is certified by Gemological Institute of America (GIA), the World’s foremost authority in independent third-party diamond certification,  that certifies the diamond on the 4C (Cut, Colour, Clarity & Carat).  This is a certificate of Authenticity.
  • All GIA graded diamonds have a unique serial number laser inscribed on the diamond which enables you to match the diamond to its certification.
  • Both the data – The certificate & the unique serial number that is laser inscribed is then assigned a unique GemID and stored on the GemChain (Blockchain). Thanks to this process, there is a strong one to one co-relation between the object (Diamond) & the Blockchain entry.
  • An authorized retailer, who inspects the Diamond along with the GIA certification, matches it to the unique serial number inscribed by laser on the diamond, along with personal identity (1st Owner) & inputs all the data on the Blockchain for a fee of US$50.  When the diamond changes hands, the subsequent ownership is also captured on the Blockchain thus establishing ownership history.
  • The origin also is traced to establish if the diamond is a Virgin Diamond or a Blood/Conflict diamond. When the diamond changes hands from the manufacturer, distributor, retailer & to the 1st Owner, complete provenance is established.  Remember, the KYC & AML is also a part of the process to maintain, both the diamond & its owner(s) are flawless.
  • In order to continue to do maintain an ownership history impeccably, the diamond is tokenized (NFT).  In case of a sale, the NFT moves from the seller’s wallet to the buyer’s wallet, simultaneously the physical asset (the diamond) also changes hands from retailer to the consumer.

GemIdentity’s objective is to help create and maintain value for precious stones through a unique set of tools and technologies to engender trust, provide traceability and promote transparency.

A state-of-the-art platform from NetObjex for the Gemstone Industry to share data, helping businesses to deliver superior consumer value by providing customers with insights on their diamond’s origin, quality and history.

Solution Benefits

Ownership

By registering a diamond, GemIdentity ensures there is an immutable record of who the owner of a diamond is.

Provenance

The origin of a precious stone is essential in understanding it has been sustainably produced and its quality guaranteed.

Authenticity

Assuring the value of the precious stones through integration with GIA certificates and laser inscription.

Traceability

The life of a precious stone is captured to give insights on its journey.

Tokenization

We issue an NFT token for each diamond. When ownership changes the new owner will have the NFT token.  The holding of the NFT is a proxy for ownership.

 

To Sum Up

The NetObjex Digital Asset platform forms the core backbone for GemIdentity

Business Outcome:


Consumers: Consumers benefit in two ways. With the Virgin Diamond they have the assurance of owning a first-hand diamond. With GemID and GemChain they benefit from having a unique identifier for their diamond stored in an immutable ledger – A single source of truth.

Retailer: Retailers can attract traffic to their stores by participating in this ecosystem to enable consumers with diamonds to help them register these gems on GemChain. They also benefit by getting a percentage of the fee collected from a consumer when a diamond is registered on the blockchain.

Manufacturers: Manufacturers can increase the value of their diamond(s) by marking them as a VirginDiamond (similar to ForeverMark ™). They also benefit by geting a percentage of the fee collected when a diamond is registered on the Blockchain.

Advantage of the Global Registry:

  • If a diamond gets stolen, it could be flagged off within the registry & Insurance claims become easier. A retailer/organization buying a diamond can track ownership to understand if they are buying a legitimately brought gem or a stolen one.
  • Lending: The owner can borrow money from the lender(Individual/Manufacturer) by pledging the NFTs. The fact that the ownership is captured in a global registry along with its provenance makes it easy to set the loan: asset value along with the period of the loan etc., for the lenders thus cutting short the process of disbursal.

A detailed view on how Manufacturers & Retailers benefit:

Consumers pay $50 (baked into Retail Price) when purchasing a new diamond in order to create a GemID record on the GemChain. Consumers also pay $50 to place an existing diamond they own onto GemChain. When one Consumer transfers ownership to another Consumer, that change of record will also involve a $50 fee.

The $50 from consumers is split in the following manner among all in the value chain

Manufacturer*
$5/transaction
 

Retailer*
$5/transaction
 

Node Operator*
$1/validation involving ownership transfers
 

GemIdentity
$15/transaction or Balance (whichever is higher)

*= if entity participates in the value chain involving Consumer ownership transfers only

The GemChain Consortium has 10 members who vote on all transactions.

Each member pays $10000 to join the consortium and operate a node and participate in voting and validation of transactions.

Each member pays $5000 for subsequent years to participate as voting member.

For each transfer of ownership at the consumer level, Node Operators receive $1 if their node is involved in an ownership transfer validation.

The GemIdentity Blockchain Platform currently holds diamonds with a market value of USD$6BN.

 
 
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