Some say that the blockchain project to fight the conflict diamond trade isn’t effective either.
In an article on Forbes, Bernard Marr outlined how blockchain technology can be used to fight the illegal diamond trade. DeBeers, along with a few other institutions, have been working on a blockchain project that would hopefully kill the “blood diamond” trade. The blockchain would supposedly track the supply chain to ensure that the only diamonds that make it to the market are ethically sourced, and that they are genuine.
Conflict diamonds, more famously referred to as blood diamonds, are illegally sourced and usually harvested from the war-torn central and western African region by civilians held at gunpoint—by rebels and even police. The skyrocketing prices tagged on diamonds have made them an attractive way to generate funds, both legally and illegally. This is a problem that has plagued the market for the past century, so much so that it inspired a movie.
Ironically, De Beers and their peers have been failing at wiping out the century-long problem that some say they helped create in the first place. International efforts to eradicate conflict diamonds have proven ineffective despite the UN-sanctioned Kimberley Process Certification Scheme (KPCS). And despite jumping in on the blockchain trend, some argue that there is still no way to guarantee that a diamond is conflict-free. IMPACT executive director Joanne Lebert said, “The public is under the wrong impression that the problem is solved.”
Solving this problem is undoubtedly tricky, seeing as diamonds are not really rare. If it were, terrorists would be looking for a different way to finance their terrorism. They are actually among the most common gems on Earth. Perhaps letting the market run its natural course and having the technically worthless stones drop in value would have criminals dropping them too?
Controlling the supply to simulate scarcity bites back eventually when supply from all directions come pouring in, unravelling the simulated rarity. This is the problem with manipulating the market: a business that depends on faking scarcity so you can inflate the price (or practically name your price) will collapse sooner or later. Or in the case of the diamond trade, gaps keep opening up. But even so, it’s highly unlikely that their profits are in jeopardy, seeing as they are raking in between 90 to 125% in mark-up per stone.
While supply chain is one of blockchain tech’s best uses, it may not be the right fix to the problem, especially because this may be more of a social issue rather than a safety one from the point-of-view of consumers. With livestock and food supply, consumers obviously prioritize ethical and legal sources. After all, it could potentially mean the difference between life and death. But for something you don’t ingest, such as a diamond ring, consumers couldn’t care less about ethics when dangled with a big discount—hence, the undying illegal diamond trade.
Whether a blockchain-based supply management and tracking system is the right solution for this problem is absolutely debatable. Blockchain technology was never meant to be a cure-all for the world’s ills. If consumers can track the movement of priceless goods such as gold or diamonds, so can criminals. Of course, there are ways to circumvent this issue, although cybercriminals are persistent and can possibly circumvent any circumvention.
While the quest to end the blood diamond trade goes beyond corporate reasons, it brings to question whether tracking priceless gems on the blockchain are even worth the effort, or if it’s just another marketing stunt. But anyone with any idea to help stop unethically sourced supplies are welcome to weigh in, the world is thirsty for blockchain start-ups, after all.