A 6.18ct lab-grown diamond, previously claimed to be a natural diamond by the Gemological Institute of America (GIA), was analyzed and graded by the International Gemological Institute.
The Gemological Institute of America, which is one of the most trusted sources for evaluating gemstone quality, was reported to have accepted bribes to upgrade its GIA reports in 2005. In 2005, a lawsuit was filed against GIA for accepting payments in order to "upgrade" the quality of diamonds submitted for grading.
The NFT as a single source of truth
Fraudulent diamond certificates are becoming more prevalent. Blockchain technology is now being hailed as a solution to this growing problem despite being innovative.
Diamond certification fraud could be prevented with nonfungible tokens (NFTs). According to Diamond Dawn's founder, Mike Moldawsky, certification reports should be placed on a public blockchain. “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 said.
In Diamond Dawn, 333 GIA-certified diamonds will be traded as ERC-721 tokens on the Ethereum blockchain. Diamonds can be purchased as NFTs by private invitation only. Each diamond NFT weighs between 0.4 and 0.8 carats and costs 4.44 Ether ETH $1,283. It will automatically send the diamond's GIA certificate to Ethereum blockchain once it has been purchased.
“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,” Mike Moldawsky elaborated.
According to Moldawsky “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 explained.
He added, Ariew recently sold his first piece of art at Sotheby's Contemporary Art Evening for $224,000, alongside famous artists such as Banksy and Basquiat.
According to Landau “In the beta testing phase, over 90% of clients expressed initial interest in this new NFT function. Customers will receive a hard copy of their GIA certificate and a copy of it will be stored digitally, ensuring its value for life,” she said.
NFTs to replace diamond certificates?
GIA is open to digital transformation. GIA's communications director, Stephen Morisseau, stated “This should be completed by 2025,” he remarked. According to Morisseau, GIA's printed reports have several security features and can be verified online using GIA Report Check.
NFTs are likely to be part of Tracr's solution in the future, says chief product officer Jason McIntosh. “Diamonds on the Tracr platform are ‘NFT-ready’ in the sense that the Tracr diamond record can easily be incorporated within an NFT wrapper,” he said.
Due to this level of innovation, Landau believes all diamonds will be authenticated via blockchain in the future. Nevertheless, she stressed the importance of ensuring consumers don't have to worry about NFT's technical aspects:
“Customers don’t need to have any crypto or blockchain experience to gain access to our NFTs. Everything is handled for them effortlessly. I believe this will drive mainstream adoption.”