NFTs may assist resolve diamond certification fraud
Diamonds could also be a woman’s finest good friend, however sadly, the billion-dollar diamond trade is rife with scandal and fraud. There have been plenty of instances the place lab-grown diamonds have been graded as pure diamonds. An instance of this was seen final yr when the Worldwide Gemological Institute analyzed and graded a 6.18ct lab-grown diamond, which was beforehand claimed to be a pure diamond on its Gemological Institute of America (GIA) report.
It was additionally reported in 2005 that the Gemological Institute of America — which is among the most trusted sources for evaluating gemstone high quality — was accepting bribes to improve its GIA reviews. In line with sources, a lawsuit was filed towards GIA in 2005 attributable to funds being accepted to “upgrade” the standard of diamonds submitted for grading.
As well as, customers are capable of resubmit a diamond for examination at GIA for any motive. This is called a follow-up service. Consequently, diamonds will be related to a number of grading reviews. This may be problematic for customers since they is probably not receiving authentic diamond certificates upon buy.
NFTs as a single supply of fact
Sadly, diamond certificates fraud is changing into extra widespread. Areas like India have even developed new frameworks to fight fraudulent actions, as seen within the Diamond Constitution drafted final yr. Whereas progressive, trade consultants have additionally began trying towards blockchain know-how to assist resolve this rising drawback.
Particularly talking, nonfungible tokens (NFTs) might function an answer with regards to stopping diamond certification fraud. Mike Moldawsky, founder and creator of Diamond Daybreak, advised Cointelegraph that diamond certification reviews ought to be positioned on a public blockchain community to make sure that paperwork can’t be manipulated. “Having a diamond certificate as an NFT on the Ethereum blockchain can ensure immutability, proof-of-ownership and visibility for both retailers and consumers,” he stated.
With a purpose to exhibit this, Moldawsky defined that Diamond Daybreak is a high-level NFT artwork undertaking that can place 333 GIA-certified diamonds on the Ethereum blockchain as ERC-721 tokens. Privately invited contributors will then be capable to buy these diamonds as NFTs. In line with Moldawsky, contributors will be capable to buy a restrict of 1 diamond NFT, with weight various between 0.4-0.8 carats, for the worth of 4.44 Ether (ETH). As soon as an NFT is purchased, a wise contract will robotically ship the diamond’s GIA certificates to the Ethereum blockchain, serving as proof of possession and verification.
Given the rise of NFTs tied to physical counterparts, Moldawsky additional remarked that NFT holders may have the choice to create a tangible artwork piece containing a GIA-certified diamond through the Diamond Daybreak web site.
“NFT holders will start with a digital rough diamond and evolve their NFT on the blockchain (on-chain) with a process that mimics precisely the in-real life natural diamond process. Ultimately, the collector will need to decide whether they want to keep their diamond digital or burn it and transform it into its physical form,” he elaborated.
An instance of Diamond Daybreak’s bodily artwork piece – a case which is able to include a GIA licensed diamond. Supply: Diamond Daybreak
In line with Moldawsky, such a course of can also be meant to lift consciousness across the notion that digital NFTs can develop into scarce over time and, subsequently, extra useful. “As more collectors decide to claim the physical art piece and burn the NFT, this will reduce the total NFT supply. As a result, digital NFTs will become more rare,” Moldawsky defined.
He added that the digital diamond artworks have all been created by artist David Ariew, who lately bought his first artwork at Sotheby’s Up to date Artwork Night for $224,000, alongside well-known artists corresponding to Banksy and Basquiat.
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