Russian Startup Develops Blockchain Solution for the Diamond Industry
A Russian startup backed by the country’s education and science ministry has come up with a blockchain-based technology for tracing diamonds’ production and supply chain. According to local news reports, it is also planning a diamond-backed stablecoin.
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Blockchain-Tracking the Supply Chain
According to the ministry, the startup, Bitcarat — formed by graduates of prominent local tech schools, the Moscow Institute for Steel and Alloys and the Moscow Energy Institute — is on the way to bringing the technology to the market. The hope is that it would lead to better protection of investors by proving diamonds’ authenticity, though like similar systems it would need some reliable way to marry physical assets to blockchain data in some inseparable way.
“In a situation when natural, synthetic and fake diamonds are circulating in the market side by side, the system will have to protect financial assets of investors and completely guarantee the authenticity of a diamond,” the ministry said in a statement, quoted by Russian news agency TASS.
Bitcarat’s technology facilitates the recording to the blockchain of the entire production and supply chain of diamonds. This includes extraction, cutting and ownership information.
Within a year, the technology is expected to enter commercial operation, said the ministry. However it remains unclear if the agency owns any stake in the company itself.
Diamond-Backed Stablecoin, Exchange and Bank
Meanwhile, Bitcarat’s plans are much more ambitious than simply building a system to prove the authenticity of diamonds. The startup also plans to issue a stablecoin by introducing a diamond-backed coin, TXD. In the longer run, the coin would potentially become part of a more complex ecosystem that would include two tokens, a digital diamond exchange called DIAX, and a digital diamond bank facilitating the creation of unique diamond futures.
Bitcarat claims partnerships with several companies, including Alrosa, Russia’s top diamond company, which accounts for 95 percent of the country’s diamond output and over a quarter of the world’s total diamond extraction.
Bitcarat is one of Russia’s few blockchain projects targeting the “real economy”, and specifically, the mining and processing sector. So far, the lion’s share of the country’s blockchain solutions have been aimed at the finance industry, such as a payment system, recently patented by state-run lender VTB.
However more recently, there has been a drive to apply blockchain technology in various sectors of the economy — an idea that the government has been promoting. Still, most industrial blockchain-based solutions are in their early stages of development, and it will take a while before their effectiveness can be proven.
Incidentally, the idea of an oil-backed stablecoin was floated in Russia a few months ago.
Will commodity and asset-backed stablecoins become more popular in the future? Please share your thoughts in the comments.
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