RAPAPORT … Somewhere between the volatility of cryptocurrencies and the
the stability of diamond prices represents an opportunity for investors. That is, a
At least, what are the many new initiatives to create crypto-coins with diamonds
betting.
In fact, the developers of these coins, or "tokens", are
sure that the asset class will offer a solution to the challenges facing both
cryptographic market and the diamond trade.
"Most cryptocurrencies are a scarce value reserve and poor
means of exchange, giving rise to a safer alternative "
says Hogi Hyun, founder and director of the D1 Mint company in Singapore,
who developed the D1 coin.
"Diamonds are the ideal support for a token, since they
they are rare, have a history as a recognized store of value, and are small and
therefore easily stored and transported ", he explains.
Investing in diamonds has not always been easy for men
in the street, he explains, given the bid-ask spread – the difference between a
the desired retailer price and what the buyer is willing to pay. If you buy a
diamond and try to sell it to a retail store or a dealer, the odds are good
they will offer an offer from 10% to 30%, according to Hyun. However,
the bid-ask spread in a cryptocurrency is usually less than 1%, he says,
it means that it is easier to recover your original investment.
Eli Avidar, president of Carats.io, based in Israel, emphasizes
that coins like the CARAT token of your company provide a safe and efficient means of
investing in diamonds, but without the need to buy a real gem or have
a deep knowledge of the market.
Other than Bitcoin
What is the difference between an asset-backed token and a
traditional cryptocurrency like Bitcoin? Hyun compares the first to the
gold standard once prevailing, so the currencies were linked to the value of
the yellow metal.
The purchase of a coin with a backs of diamond gives a property on a
fraction of a diamond. If you have enough coins, you can change them for one
real stone: D1 and Carats.io keep an inventory of goods that support the
stability of the respective currencies.
"For every dollar that enters the token, there is a dollar
that goes into a resource, "explains Hyun." So all the money that is generated
from the sale of the token is put into the purchase of physical diamonds. "
In contrast, Bitcoin is more like a dollar issued by a
Central Bank. When printing money, the bank does not have to keep tons of gold,
Hyun notes; we just have to believe that the dollar is worth a dollar.
Holding inventory
D1, which has recently launched private sales of its token e
I will open it to the public soon, cooperated with Hong Kong
producer KGK Group, which agreed to provide 20 million dollars
rough mined Alrosa polished diamonds. They also make cryptocurrencies
goods from Russian manufacturer Kristall and is looking to expand its offer.
At $ 10 a token, if D1 issues 1,000 coins, it is $ 10,000
can use to buy, for example, a 1KKK diamond. The stone is then sent
at the Gemological Institute of America (GIA) for classification and laser
registration, return in a tamper-proof package for storage in D1
times.
The anti-tampering prevents the need for auditors
re-grade the diamond when they check inventory every quarter, explains Hyun.
"They are not gemologists, so they control the package rather than the stone.
For our investors it is important to know, and for a third party, to confirm how
many diamonds are there in the inventory, what is the quality and price of
every diamond. "
The close group of suppliers also makes it easier for D1
traces its diamonds Uses a very simple "linear provenance" to trace the
stones, secured by blockchain ", according to Hyun.
Also Carats.io has several suppliers for diamonds
back his token. The company, which recently debuted CARAT on Hotbit
Digital exchange, has signed an agreement for the purchase of goods through IDEX trading
platform and intends to enter into agreements with other trading platforms, Avidar
relationships.
Carats.io also developed a price index to which the
the value of the coin is connected. As with D1, the products themselves are registered in
a blockchain, allowing diamonds to change hands safely.
A strategic partnership
Given the amount of inventory needed to support the currency,
Avidar believes that the demand for tokens will help expand the diamond market –
especially as the value of coins increases together with prices and demand for diamonds
for tokens. Beyond simple exchange, provides other uses for coins –
for example, as security for loans.
Carats.io recently signed an agreement to this effect with
Celsius, which provides banking services for the crypto community. Under the
deal, Celsius offered credit and accepted CARAT as collateral. Carats.io
he also collaborated with a Chinese jewelry wholesaler who will now leave
customers pay in CARAT.
Obviously, the D1 and CARAT are not the only ones in support of diamonds
currencies traded; other players include Hello Diamonds and CEDEX. IS
while these are still at a relatively early stage, they are coming at a time
when asset-backed tokens in general are gaining interest in cryptographic space.
In an April article for Invest in Blockchain
publication, analyst Daniel Frumkin has predicted that such coins could prove useful
role in the cryptocurrency market, even if the mechanisms that maintain the values
pegged to the underlying assets are complex and the technology still unproven.
In addition to diamonds, favorite supporters include gold and real estate.
With the volatility of Bitcoin – from which the value has risen
about $ 1,000 to nearly $ 20,000 in 2017 before plunging to $ 3,330 from the press
Tuesday time – diamond currencies can be attractive for the most risk averse
cryptographic investor, says Hyun. At the same time, it indicates the new roads of
question that could open for diamonds, as they make it one "easier, faster
and more fun. "
This article appeared for the first time in the December issue of Rapaport magazine.
Image: criptovalute. (Shutterstock)
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