Complex Made Simple

Meet the companies bringing blockchain to the gem industry: Part 2

The Emerald Paternity Test is a new technology that uses customised DNA-based nanoparticles enabling traceability of emeralds back to the exact place of mining. Learn how this tech works and its importance in the gem industry here

An invisible birth certificate becomes part of the gemstone and can be retrieved and read out at any stage along its journey Jewellery brands can do a customised and trustworthy storytelling based on tamperproof facts The Provenance Proof Blockchain is suitable for any type of gemstone, including coloured gemstones, diamonds and pearls

In Part 1 of this two-part series, UK company Gemfields, a prominent leader in the mining, processing and sales of responsibly sourced colour gemstones, was featured via an interview with Sean Gilbertson, the CEO of Gemfields, revealing the intricate gem business in Africa and their use of Provenance Proof allowing gemstones to have an official, immutable record that is traceable across the supply chain.

For this to happen, Gemfields had partnered with specialist gemology firm Gübelin Gem Lab, the creators of a new traceability technology which creates an independent proof of provenance for emeralds.  

Called the Emerald Paternity Test, this new technology uses customised DNA-based nanoparticles enabling traceability of emeralds back to the exact place of mining. The nanoparticles can be retrieved and decoded at any stage along the supply chain and offers a completely new level of transparency when sourcing emeralds, instilling confidence and creating trust. 

In part 2, we’ll explore Gübelin Gem Lab’s technology with Managing Director Dr Daniel Nyfeler featured here.

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1- Please expand on the Emerald paternity test which uses nano labels across the supply chain to traces gem to exact mine. Why is it so important and to whom?

By applying such labels – usually referred to as physical anchors –an invisible birth certificate becomes part of the gemstone and can be retrieved and read out at any stage along its journey. In view of the complexity, transparency and fragmentation of the gemstone supply chain, this is a massive leap forward, allowing governments, brands, regulators, insurers or consumers to verify the information that comes with the gemstones. When combined with such a physical anchor, the information gathered in a digital tracking system, such as the blockchain, also becomes much more robust and trustworthy.

2- What role does Gübelin Gem Lab play in addition to analyzing gems and identifying their sources in the overall operation of Gemfields?

Traditionally, the Gübelin Gem Lab is testing the identity and authenticity of gemstones – mostly cut – as a service to the trade. Hence Gemfields was not a major direct client, as they sell rough to the trade. With our activities in the development of transparency technologies for the gemstone industry, mining companies became more relevant. Back in 2017, Gemfields kindly volunteered to be our pilot partner during the feasibility study of the Emerald Paternity Test, and since then has been a loyal client of this service, which of course is available to anyone in the industry, like all Provenance Proof technologies. Gemfields also was amongst the first to use the Provenance Proof Blockchain and is now the first miner to upload large quantities of rubies to the blockchain. 

3- Why is transparency so important across the supply chain?

Because today’s clients expect it. They get it in many other products, also fast-moving consumer goods such as food, and rightfully expect it in luxury products. It is also beneficial for the jewellery brands, because they can do a customised and trustworthy storytelling based on tamperproof facts. Brands want it to handle supply chain risks. And it reduces the administrative workload when having to satisfy regulators, auditors, insurances and banks.

4- Does your blockchain technology bring absolute transparency from the mining stage to end-users? How?

The Provenance Proof Blockchain basically is an electronic diary or logbook of a gemstone (or a parcel of gemstones), that accompanies the gemstone from its birthplace in the mine all along its journey to the final customer.  Every stakeholder that gets in possession (or custody) of the gem writes a chapter in the diary. What is written in the diary remains there, no entry can be deleted or changed. The digital diary is encrypted and tamperproof through hyperledger blockchain technology. When the gemstone is handed over to a next owner, so is the digital diary passed on from one virtual inventory to the next. Every transaction is recorded as a new entry to the blockchain, providing transparency into the complete journey of a gemstone, from the mine to the end consumer. The Provenance Proof Blockchain is suitable for any type of gemstone. While it is built to cater the needs of coloured gemstones, it can also be used for diamonds and pearls (but does not serve their specific properties such as the 4C’s yet). 

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So the blockchain gives a comprehensive history of the gemstone, by means of a logbook that is written by the previous owners. Naturally, the level of completeness of information that these stakeholders contribute may vary a lot. The compulsory data is fairly small, focusing on the supply chain only. But the platform provides space to add a lot of rich data on the background of the gem and the company, contributing to the wealth of data which the retailer can use for its storytelling.

5- Do clients trust blockchain tech or even understand it considering that it is still nascent tech?  

We have seen a massive change. Two years ago, blockchain was considered a technology for geeks that do speculative business in the finance area. Now, it is seen as a technology that is assumed to penetrate many aspects of our lives, get integrated in existing systems, and become commonplace. In parallel, many in the trade have accepted the need for transparency, and embrace a pro-active approach, also including the use of technology.

6- Is the transactional encryption key used in this industry and what cybersecurity risks are involved that might jeopardize the operation?

Having chosen Hyperledger, our Provenance Proof Blockchain uses a very robust protocol. And with Everledger, we have a partner that is positioned best to cross the bridge between technology and business. Obviously, security and encryption are built into the platform at several layers. Together with our technology partners, we have performed 3rd party penetration and vulnerability tests, which are repeated periodically. 

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7- Will blockchain be used just to trace and document the steps involved in mining, supplying and selling colored gemstones, or will it include future sub-models like tokenizing the Gem mining industry or securing P2P transactions via smartphone apps, etc.

The main purpose of the Provenance Proof Blockchain is to give the end consumer transparency into the supply chain. To achieve this is already a major advance for an industry that is seen as untransparent. But naturally, the availability of such a tracking system will open doors for further applications, and will encourage other uses, possibly including payments, giving-back functionalities, taxation, auditing, etc. 

8- Do the DNA-based nanoparticles you’re using originate as a gem-related innovation, or are there other uses for them?

The DNA-based particles were built unspecifically. We have further developed the core technology and customised it for the application on gem materials. We have secured this IP in a patent to make sure it remains available to everyone in the industry. The core technology is property of a university and can principally be applied in other industries such as oil, food, textiles and cosmetics.