Supply Chain
IBM TrustChain Tracks Diamonds from Mine to Finger

Though diamonds in today’s jewelry market are much more likely to be conflict-free, thanks to the Kimberley Process Certification Scheme, it can still be difficult to trace individual components back to their exact origins. IBM and a newly formed consortium of gold and diamond businesses aim to make the jewelry supply chain more transparent through the use of blockchain technology.

The TrustChain™ Initiative is the first cross-industry initiative to use blockchain to trace the provenance of finished pieces of jewelry across the supply chain, and is designed to halt the illegal trade in so-called “blood diamonds” – diamonds mined in war zones and sold to finance an insurgency, an invading army’s war efforts, or warlord’s activity – and promote ethical jewelry in general.

Consumers want to know that the jewelry pieces they’re purchasing are what they believe them to be, but the size and scale of the jewelry industry can make that difficult. The supply chains are long and complicated, involving miners, gemological scientists, certifiers, regulators, shipping managers, wholesale suppliers, designers, retailers, insurers and other interested parties. Information is not shared across the entire network, so there are often multiple versions of the same documents that must be reconciled. Fraud can occur because jewels and precious metals change hands so many times along the supply chain.

TrustChain will track and authenticate diamonds, precious metals and jewelry at all stages of the global supply chain, from the mine to the retailer. The transactions and data points in the jewelry supply chain become “blocks” that represent unique information that once verified, becomes part of a permanent chain that ultimately is the entire digital record for the piece of jewelry. This process is enabled by IBM’s blockchain technology and Underwriter Laboratories (UL)’s independent third-party verification services.

The consortium believes it is well-positioned to engage with the wider industry on a solution that will improve efficiency in managing the global movement and provenance of diamonds and precious metals. The industry collaborators represent the entire diamond and jewelry supply chain: Rio Tinto Diamonds (diamond supplier for Proof of Concept only), Leach Garner (precious metals supplier), Asahi Refinery (precious metal refinery), Helzberg (US jewelry retailer) and the Richline Group (global jewelry manufacturer). They note that they already employ best practice in management of their supply chains , with TrustChain linking the parties together to provide a new level of assurance to consumers regarding the traceability of their jewelry.

“This initiative is important for our industry as we seek to raise the collective responsibility and provenance practices to new heights,” said Mark Hanna, Richline Group’s Chief Marketing Officer. “TrustChain is the first blockchain of its kind within our industry, designed as a solution that marries IBM’s leading blockchain technology with responsible sourcing, verification and governance by third party organizations, led by UL as the administrator.”

One of the major benefits of blockchain, or distributed ledger technology, is having one immutable and continuously updated record of transactions that is shared to all network participants. If a gem is recorded on blockchain, its provenance can be tracked back to its origin. It empowers those in the blockchain network to collaborate and establish a single shared view of information without compromising details, privacy or confidentiality.

Startup Everledger has already proven this is possible by logging the identifying characteristics of over 1.6 million diamonds on blockchain since 2015. For its part, TrustChain recently completed its first proof-of-concept test, in which gold went from a mine in South Dakota to a refinery in Utah, to a fabricator in Massachusetts that converted the gold into casting nuggets and grains. Those then went to a manufacturer in India that made engagement rings and set diamonds in them. The rings went to a distribution facility and then to Helzberg. UL monitored the transactions throughout the process.

“Consumers care deeply about the quality and source of the jewelry they purchase,” said Bridget van Kralingen, IBM Senior Vice President, Global Industries, Platforms and Blockchain. “This is evidenced by the fact that 66 percent of consumers globally are willing to spend more to support sustainable brands. TrustChain is an example of how blockchain is transforming industries through transparency and viable new business models that specifically benefit the consumer.”

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