What is blockchain technology?
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Don & Alex Tapscott, authors Blockchain Revolution (2016)
The blockchain is tamper-resistant because the data is stored at distributed digital ledgers and the data is updated through the agreement by the participants in the system.
The below short video is what I think is the easiest to understand among YouTube videos explaining blockchain.
Game changer for supply chain management
Now we have the basic idea about the blockchain. It can be used for everything with value such as supply chain management in creating transparency and traceability. Players in a supply chain for a certain product can record, track, assign, verify and share the information about the product and transaction which makes their work more efficient and can reduce human errors and fraud. Some supply chains have already started using the blockchain.
Use in the diamond supply chain
Blockchain can also be used in the diamond supply chain where the provenance is an issue. Ethical jewelers and many customers want to know where the diamonds are from. Here’s another video clip explaining the use of blockchain in the diamond industry.
Isn’t it great that the provenance issues of diamonds can be solved with blockchain? Blockchain technology is like a miracle, isn’t it?
Well, yes and no.
Implications of application of blockchain use in the artisanal diamond mining setting
I strongly believe that knowing the provenance of a diamond, who mines where, who polishes where, and who creates jewelry with it is the first step to ensure the diamond is conflict free and ethically traded. I welcome the blockchain technology to be used in the diamond industry in this sense because it is impossible to know under what conditions the diamond is mined, cut and processed if we don’t know where it has been.
On the other hand, what if the information documented at the digital ledger is false? Once the information is updated to the digital ledger, the blockchain is tamper proof. It doesn’t mean that the blockchain can guarantee the authenticity of the information to be documented in the first place, does it?
It may not be difficult to ensure the authenticity of the information in a large scale mines where everything is regulated and there are security measures to prevent outsiders from coming in, which helps diamonds not to get mixed with those mined outside.
What about the artisanal diamond mines in Africa where there is no fence, no security camera and no security staff? For example, a miner might buy a diamond somewhere outside his mining claim, bring it and says “hey, I mined this diamond in my claim.” The authenticity of the information uploaded to the ledger gets compromised. The system loses trust by other actors in the supply chain in a case like this.
In Liberia where Diamonds for Peace works, the artisanal diamond miners are in poverty and may do anything to get a small profit. I can’t blame them because they are desperate only to survive. We need to create a system which prevents the false statement to get uploaded to the ledger in the first place. The question is how we can do so with very little cost or no cost so that it will be sustainable.
Any good ideas? Please share it with us if you do! We can open the door to a better world together.
You can contact us via email. info[at]diamondsforpeace.org