By Steve Kuh, CEO of Bonafi
These days, blockchain technology is used everywhere. Whether it’s in healthcare, financial, or the security sector, the possibilities are endless. But first, let’s recap: blockchain is a growing list of records, in which each ‘block’ is linked to the others using cryptography.
The system is decentralized, and every individual block contains a timestamp, a hash from the previous block and details as to the transaction or exchange. In addition, the information is distributed over millions of computers, or nodes, and is considered an immutable public ledger since it is impractical to fake information on all nodes of the blockchain network.The Problem of Counterfeit Goods
In many retail industries, there is a growing problem of counterfeiting, especially with jewelry. Luxury brands spend a significant amount of resources trying to prevent the sale of counterfeit goods, but in every case, no real preventative action works.
Various luxury brands have become victims of counterfeiting and have filed lawsuits against illegal manufacturers, but in these situations, the damage has already been done. The retailer loses an established reputation, a consumer ends up with a product that is less valuable than what they hoped, and a brand’s exclusivity is tarnished.The Solution
Blockchain technology can be used to provide a solution and increase security in the retail industry, such as prevention of the sale of counterfeit jewelry. Using a decentralized chain of records, manufacturers, brands, retailers, and customers can access information about a product and check its authenticity. The idea intends to conclusively rule out chances of retailers selling counterfeit goods and customers falling for high-quality fakes.Utilization of the Blockchain
It all begins with manufacturers and brands of jewelry to join the blockchain. This is an immutable, digital public ledger which is powered by a cryptography engine. It uses a physical tag that is slightly smaller than an inch in diameter and paper thin. Once attached to an item, it is scanned by a phone App and information is recorded on the blockchain. The data contains the location, time, date, SKU, UPC, serial number, picture, video of the item, manufacturing site, shipping point, inventory, and sales - the supply chain information.Recording Activity
Embedding products with the tag will allow different events to be recorded in the blockchain as the jewelry moves through the supply chain. For instance, moving from a manufacturer’s location to a retailer’s store will trigger the shipping recording process, and the data is added to the blockchain.
The tag will continue to record information even after retailers and third-party sellers receive the item. The blockchain will possess unique identities for each piece of jewelry, and the data will remain on it because of its immutable nature. Let’s not forget that since all similar pieces will go through the same process, all the records will have the same data.Retailers and Consumers Can Verify Authenticity with a Phone App
After receiving a supply of jewelry, retailers and sellers can use a phone App to scan individual pieces of jewelry. The application communicates with the blockchain through the tag to verify each piece’s authenticity. This can help manufacturers track the use of their products and retailers can avoid selling counterfeit products in error.
The tag and application protect customers as well; end consumers can use the App to verify the authenticity of the piece they purchase. Through the online platform with the app, they can review the product and communicate with the manufacturer directly as well. This protects the customer from buying a counterfeit product.
Thanks to a blockchain-oriented solution, customers do not have to be wary of buying from retailers in fear of buying a fake. However, this is just the beginning. The solution applies to a wide variety of exclusive products and goods.About Steve Kuh
Steve Kuh CEO of Bonafi, a startup that builds an online platform where manufacturers and consumers come together to share information to authenticate goods that we buy every day. Bonafi uses its Bonafi-Tag to record the supply chain information on blockchain and its phone App to show the authenticity. For more information, please visit www.bonafi.io.
Written by The Diamond Producers Association1) Laboratory-grown diamonds have essentially the same physical and chemical characteristics as natural diamonds, but they are not identical,
and they are easily detected.
Laboratory-grown diamonds are produced in 2-3 weeks using two different methods: High Pressure High Temperature (HPHT) and Chemical Vapor Deposition (CVD). Each method leaves growth marks and telltale signs that are distinctive of an artificially produced diamond, this is how they can be identified using professional instruments. Moreover, most synthetic diamonds need to be color treated to correct distortions created during the industrial production process.[Lab Grown Pressure Marks]2) Laboratory-grown diamonds are produced in a matter of weeks, primarily in factories situated outside of the US, mostly in Asia.
Most laboratory-grown diamonds are not produced in the US but in China, India, and Singapore. There is a lot of investment in new production capacity in Asia today and the share of Asian producers is likely to increase further. Laboratory-grown diamond producers often make claims about their product being “eco-friendly,” “transparent,” and “sourced with integrity.” However, these claims are usually vague and unsubstantiated and the origin of the product is almost never disclosed.[Diamond Lab]3) Retail price continues to erode as the costs of production decline.
Production costs of laboratory-grown diamonds are driven almost entirely by electricity usage, which is why some producers move to regions where electricity costs are low. This explains why over time, as technology improves, production costs will continue to decline. In the case of color gemstones like rubies, sapphires or emeralds, the price of synthetic stones is about 10% of that of the natural stone.
Also important to know: due to economies of scale, the larger the synthetic diamond produced, the lower the cost per carat – a stark contrast to natural gemstones.As an industrial product, a laboratory-grown diamond has no resale value and its price is falling rapidly.[Price in $USD of 1ct Natural Diamond vs Synthetic; Source: Data Source: Natural and synthetic prices: Paul Zimnisky, www.paulzimnisky.com]4) The carbon emissions for a one carat synthetic diamond are similar to, and sometimes greater than, those for an equivalent natural diamond.
When making comparisons with natural diamonds, synthetic diamond manufacturers often quote theoretical carbon emissions for synthetic diamonds that assume that they use 100% renewable energy. In reality, synthetic diamond production today primarily uses electricity generated by fossil fuels, mostly in China, India and Singapore. Rigorous comparisons require case by case analysis, depending on producer and country grid emission factors. Taking the example of a 1-ct synthetic diamond produced in Singapore using the Chemical Vapor Deposition (CVD) method where a significant volume of the CVD synthetic diamonds are produced, the carbon emission per polished carat is approximately 40% higher than for natural polished diamonds.[Carbon Emission Per Carat; Source: DPA Analysis]5) A large majority of consumers do not consider laboratory-grown diamonds produced in a factory to be real diamonds because they are not formed naturally
in the Earth.
A Harris poll from May 2018 shows that 68% of US consumers believe that a laboratory-grown diamond produced in a factory is not a “real diamond.” Only 16% of respondents believe they are. Other surveys show that as they learn about the lack of inherent value of synthetic diamonds, fewer consumers consider them to celebrate important moments in their lives, even if a growing proportion consider them for fast fashion jewelry.68% of US consumers believe that a laboratory-grown diamond produced in a factory is not a “real diamond” [Source: Harris Poll, 360 Study, for DPA]Read Also: Five Essential Diamond Truths
.About The Diamond Producers Association (DPA)
The Diamond Producers Association is an international alliance of the world's leading diamond mining companies who are united in their commitment to best-in-class ethical and sustainable operations and transparent business practices. Together, DPA members represent the majority of the world diamond production. The DPA mission is to protect and promote the integrity and reputation of diamonds, and of the diamond industry. For more information, please visit www.diamondproducers.com/diamond-truths-infographic.