ONE CHAIN TO RULE THEM ALL? With so many different initiatives in the works, it appears there could end up being a number of sources of truth. One question being asked is, will these systems be able to communicate with each other? JulieYoakum, chief merchandising officer at Helzberg Diamonds, the retailer inTrustChain, believes inte- gration is important, and notes that creating an inclusive supply chain that encompasses different block- chain platforms is a goal for many industries, not just jewelry. Leanne Kemp, CEO and found- er of Everledger, agrees. “With all of these new and independent [blockchain] services having similar functionality with increased overlap, it has become clear we as an industry must now allow these networks to communicate with one another, the imple- mentation of which… will revolutionize the way in which we interact with these infrastructures.” So far, though, no one knows exactly what this interoperability will look like. Drawing on the London transport system as an example, Kemp explains while there are a number of independent means of transport both underground and above it, they can all be accessed using a single payment system (called the Oyster card) that allows users to easily and simply switch between different providers. Who or what will be the industry’s “Oyster card” is currently un- known. One thing is clear, at least at this point—it will not includeTracr, which is not currently designed to interact with other blockchain ledgers. That might not be as problematic as it sounds, however. Greenspan, the blockchain expert, does not see the technical viability of full interoperability between different platforms. He explains that it is still early days for blockchain technology, and multiple networks and experiments are to be expected. As time goes on, however, and systems become more fully developed, he would expect one particular blockchain to be adopted for each application. STUMBLING BLOCK? Interoperability is not the only logistical question to consider. Another important one is how, or even whether, to add the billions of dollars’ worth of diamonds already in the pipeline, and in the hands of consumers, to the blockchain. Initially, says Zerouki, Tracr will only register primary-sourced diamonds. Down the line, De Beers intends to create an entry point to add existing goods but believes the means of doing so must be discussed with the wider industry. Kemp says she expects eligible materials, such as metals and dia- monds, produced before a still-to-be set date will be grandfathered into the blockchain. This might include refining dates on precious metals bars, laser inscriptions on diamonds or even inventory records showing continuous ownership since before the cut-off date. “For diamonds, it is proposed to allow one year for supply chain en- tities to clear existing inventory and use the volume to establish chain custody systems. Eligible diamonds are those that were owned before the set day, which must be demonstrated by inventory records of the entity that wishes to initiate a chain-of-custody with them,” she says. It wouldn’t be the first time a large-scale grandfathering-in has occurred in the industry. When the Kimberley Process Certification Scheme was estab- lished in 2000 to stop conflict diamonds from entering the legitimate diamond trade, all rough stock existing by Jan. 1, 2003 was “forgiven.” Only goods mined after that date were subject to the certification process. THE BLOCKCHAIN BENEFITS There’s also the question of, what exactly adding blockchain to the industry will achieve and if it’s even the right tool for the job. Greenspan asks a simple question about any proposed blockchain use case—what does a decentralized ledger provide that a regular or centralized database cannot? Blockchain might make a tracking system such as Tracr, Everledg- er or TrustChain more palatable by removing centralized control, but the same result can be achieved—albeit with the insertion of a trusted intermediary—using existing tools. As Greenspan points out, diamond and jewelry components can be, and already are, tracked using regular databases. In many proposed use cases, Greenspan says, a blockchain is not providing any value. Rather, he argues, the term “blockchain” is often used as a way of achieving funding and publicity. He believes critical thinking needs to be applied to assess whether or not a blockchain is right for a particular job, and posits that, all too often, this is lacking in what he terms “the current over-hyped environment.” Despite these reservations, blockchain seems to have caught on in a big way. Its decentralization and permanence are appealing to consumers who want reassurance about the provenance of their product.Although, as Greenspan points out, while blockchain removes the need for a trusted person to oversee the ledger, you still have to be able to trust the parties adding data to the ledger, especially at the start of the tracking process. Alab-grown diamond falsely recorded as natural, or a mined diamond with an unreported treatment or fake Kimberley Process certificate, will still be just that as it moves through the supply pipeline, whether it’s being tracked using blockchain or not. Oncethistrustisestablished,providinganidenti- fiable,authenticatedprovenancewillbuildthetrust andconfidenceintheupstreamstakeholdersand,says Kemp,“consumerswillhavethepeaceofmindofknow- ingwheretheirdiamondcomesfrom.” She argues that when a valuable item lacks an identity, it loses its authenticity, ownership, existence and, ulti- mately, its value, which is something block- chain can prevent. “Forensic approaches to 48 STATE OF THE MAJORS 2018 TrustChain, the IBM-powered blockchain piloted by a group of Berkshire Hathaway-owned companies, UL and Asahi Refining, started this spring with a group of six engagement ring styles, one of which is seen here. The six rings used for the TrustChain test run featured 14-karat white or yellow gold mined in South Dakota and diamonds from Rio Tinto. THE STATE OF THE MAJORS THE DIAMOND INDUSTRY JEWELRY DESIGN THE COLORED STONE MARKET Continued on page 50