There are generally two main motivations for investors to purchase commodities such as diamonds and precious metals. One is that they are hoping for the given commodity to appreciate in value such that it offers above-market returns. The other is simply to diversify their portfolios through a stable store of value, reducing overall risk.
Diamonds have historically been the most stable of those commodities, making them an appealing option for investors who are trying to hedge against inflation or the stock market. However, diamonds are very rarely actually used as an investment vehicle by general investors. Many companies have tried to change that fact over the last decade or two, but all have failed.
And that brings us to CEDEX, the first ever certified blockchain based diamond exchange. The incredible surge of cryptocurrencies during the last couple of years has led to a lot of innovation, especially in the financial sector. CEDEX is on the cutting edge of that innovation, and it promises to do what all of those companies have failed to do in the past. That is, to turn diamonds into a publicly tradeable asset.
One credible point that cryptocurrency skeptics often make is that there is little need for blockchain technology in most industries. Blockchains like Bitcoin’s are slow and costly to run, so it’s fair to argue that they will likely fail to take hold in industries where they don’t solve significant problems. Diamonds, however, are not one of those industries.
You see, there are some very good reasons that diamonds don’t have public markets that resemble those of similarly valuable commodities like gold and silver. The three biggest of those problems are a lack of liquidity, lack of transparent pricing, and lack of standardization. Blockchain technology provides a solution to two of those problems – the lack of liquidity and transparency. Meanwhile, CEDEX’s proprietary machine learning algorithm, the DEX, brings a new level of transparency and standardization to individual diamond pricing.
If you haven’t heard much about blockchain before, there’s one major concept that’s important to know. Blockchains can be defined as distributed digital ledgers of information, and that enables something called decentralization. What that means is essentially that systems can exist and function fully without a central authority governing or maintaining them.
CEDEX’s implementation of blockchain technology allows for peer to peer (P2P) diamond exchanges. In other words, individual buyers and sellers can transact directly with one another. There is no longer a need for a costly middleman to facilitate transactions, and that will result in better value for both parties.
Suppose that you have a diamond ring that you no longer want. In the modern diamond marketplace, you would take that diamond to a professional appraiser that has the knowledge and experience to evaluate it. However, that appraised value will be far below the true market value – likely between 30 – 50 percent so. As a consequence of diamonds lacking fungibility, it’s not really possible for amateurs to participate in the market with professionals unless they are willing to accept those significant losses.
With CEDEX, selling that diamond ring will be a far different process. Your first step would be to upload the diamond’s GIA certificate to the DEX, which will then further analyze it and price it with an accuracy of greater than 99.5 percent. You’d then list the ring on the decentralized exchange, where amateur and professional buyers alike will be able to confidently purchase stones that are priced with unprecedented transparency and standardization.
When you find an interested buyer, you would enter into a smart contract that ensures that neither of you can rip off the other, and the exchange goes through without a hitch. Ultimately, you’ll get more for your diamond than was ever possible for amateurs sellers before CEDEX existed.
The CEDEX exchange’s native cryptocurrency is CEDEX Coin. It will be used for diamond transactions like the one described above, as well as for payment of secondary services such as diamond transport, custodianship and insurance, to name just a few of its many functions. As the currency that provides unparalleled transparency and efficiency, CEDEX Coin can soon develop into the ubiquitous medium of exchange for the public diamond market.
The first chance for investors to purchase CEDEX Coin will come with the March 16th token pre-sale. To register for the pre-sale or learn more about CEDEX and their innovative technology, check out their website. You can also get involved with CEDEX team and community on Telegram, as well as by following the project on Facebook and Twitter.