Blockchain could be a solution on Blood Diamonds

What are Blood Diamonds ?

The term Blood Diamonds is used to highlight the negative consequences of the diamond trade in certain areas. Blood Diamonds are also known as War Diamonds or Conflict Diamonds indicating an individual diamond as having come from war zone areas. Diamonds mined during the recent civil wars in Angola, Ivory Coast, Sierra Leone, etc were labelled as Conflict Diamonds or War Diamonds.

In simple terms the countries in the war sell the diamonds to purchase the weapons, guns and other destructive equipments. Traders buying these diamonds were indirectly the sponsors of the terrors or war as they were funding against the diamonds. Some of these financiers were intentional but many of them got involved unintentionally as they lacked the information of the origin of the blood diamonds

Kimberley System

In order to stop the trade of these war diamonds, The Kimberley system was adopted in the year 2000. It attempted to increase governments' transparency by forcing them to keep records of the diamonds they are exporting and importing and how much they are worth. However, the problem with this system was that the documents were easily tampered with, and it was impossible to be 100 percent certain when buying a diamond that it’s conflict free and legitimate.

Adoption of BlockChain

This was the pain point of the Industry, which lead towards adoption of the Blockchain. In last decade the social media has played a significant role in marketing and distribution of these diamonds through Facebook or Whatsapp. Technology helped in boosting the trade of blood diamonds. However, in last three years after adoption of Blockchain more than 2 million diamonds are registered individually on the Blockchain. The information such as Colour, Carat and clarity is being recorded on the Blockchain. Applications are built on blockchain to help distributors easily establish the origin of diamonds on the network by simply scanning records. These applications allow them to make an informed decision on whether or not to accept a particular diamond

diamond industry is adopting Blockchain because, it is a decentralised ledger with records that can’t be corrupted.

The information is securely housed on the Blockchain network, which creates a tamper-proof audit trail that can also be used against money laundering and to fight the terrorist financing efforts.