Even though diamond is a precious gemstone that is widely used in jewelry, it is not considered as an asset because it is not fungible like Gold. i.e You cannot simply exchange or replace one diamond with another as every stone is unique. Unlike Gold, the price of diamonds is not uniform worldwide and is mostly decided by the seller. Because of the low liquidity, diamond market is considered as a one-sided market which doesn’t provide any option for the buyers to resell the diamonds. To make diamond an asset like Gold, two things need to be done which are given below:
- Create transparent pricing for diamond and convert it to a fungible asset like Gold
- Creation of a trading platform which will help buyers/traders to resell their diamonds so that the market will be two-sided instead of the existing one-sided market.
To achieve the above two goals, CEDEX a new blockchain based diamond exchange is under development. The main objective of CEDEX (Certified Blockchain Based Diamond Exchange) is to transform diamonds into an asset like Gold. For that, it is building the four main pillars of the CEDEX platform as given below:
- Tokenization: For every diamond, a new smart contract will be created with the information about ownership, trading history, and gem composite.
- DEX: DEX (Diamond Exchange) is the proprietary algorithm of CEDEX that will be used for evaluating the value of diamond instead of using the existing 4C (Color, Cut, Carat, Clarity) method. The algorithm uses three main factors for diamond evaluation as given below:
- Gem composite: The score is calculated based on analysis of more than 20 characteristics of the diamond. Data for the analysis is obtained directly from the GIA (Gemological Institute of America). More score, more perfect diamond.
- Parallel Trades composite – Here, the value of a gem is compared with similar gems in the same category. This analysis is helpful to find the average price of the gem in a category. It also considers the rarity of a gem while evaluating the value.
- Diamond Indices composite – This indicates the direction in which the diamond market is progressing.
- Exchange – A blockchain based exchange will be developed to connect the gem owners and traders for making the transactions in a flexible manner.
- CEDEX coin – A new cryptocurrency that will be sold by the platform during its token sale event. These coins will be used to buy a diamond from the CEDEX exchange. Check out https://cedex.com/ to know the latest updates about the token sale event and the sale procedure.
Based on the analytical data of a diamond, the investors can easily find out which diamond is worth the money. Also, CEDEX exchange will list only the diamonds that have the GIA certificate which will ensure the reliability and trust of the gemstone as well the seller. In a nutshell, CEDEX aims to create a transparent diamond exchange that can be used even by the buyers who have zero knowledge about diamonds. To read more information about CEDEX, please check their official whitepaper https://cedex.com/img/Whitepaper.pdf or join the Bitcointalk discussions.