Although diamonds are a girl’s best friend, the billion-dollar diamond industry is sadly full of controversy and fraud. Numerous instances of lab-grown diamonds being rated as natural diamonds have occurred.
A 6.18ct lab-grown diamond, represented in a report from the Gemological Institute of America (GIA) as a natural diamond, was examined and graded by the International Gemological Institute last year.
Additionally, it was revealed in 2005 that the Gemological Institute of America, one of the most reputable organizations for determining the quality of gemstones, was receiving payments to increase its GIA reports.
GIA reportedly faced legal action in 2005 due to money taken to “improve” the quality of diamonds submitted for grading.
Additionally, customers have the option to resubmit a diamond for GIA evaluation for any reason. Providing follow-up services is what this is. Diamonds can therefore be connected to a variety of grading reports.
As a result, customers may not receive authentic diamond certifications while making purchases, which might be troublesome.
A Single Source Of Truth Using NFTs
Unfortunately, there is an increase in diamond certificate fraud. As seen by the Diamond Charter, which was written last year, nations like India have even created new structures to address fraudulent practices.
Industry experts have begun considering blockchain technology as an innovative solution to this expanding issue.
The prevention of diamond certification fraud, specifically, may be achieved by the use of nonfungible tokens (NFTs). Diamond certification reports should be stored on a public blockchain network.
According to Mike Moldawsky, the founder and inventor of Diamond Dawn. He did it to prevent document manipulation.
According to him, placing a diamond certificate as an NFT on the Ethereum blockchain may provide immutability, ownership evidence, and visibility for both shops and customers.
Moldawsky cited the high-level NFT art project Diamond Dawn as an example, explaining that it will list 333 GIA-certified diamonds as ERC-721 tokens on the Ethereum network.
Then, these diamonds will be available for sale as NFTs to participants who have been privately invited. Moldawsky claims that players can spend a maximum of 4.44 ether on one diamond NFT weighing between 0.4 and 0.8 carats.
After purchasing an NFT, a smart contract will immediately submit the diamond’s GIA certificate to the Ethereum blockchain as evidence of ownership and verification.
Moldawsky added that NFT holders would have the opportunity to use the Diamond Dawn website to produce tangible artwork incorporating a GIA-certified diamond, given the growth of NFTs linked to physical equivalents.
He also added that:
“NFT holders will begin with a digital rough diamond and evolve their NFT on the blockchain (on-chain) via a procedure that closely mirrors the in-person production of actual diamonds. The collector will ultimately have to choose whether to burn their diamond to turn it into its physical form or preserve it in its digital form.”
According to Moldawsky, this procedure also aims to spread awareness that digital NFTs may eventually become rare and precious.