- Diamond Standard has announced that it is unlocking the investment potential of Diamonds by tokenizing on Hedera.
- Hedera was chosen for its security, speed, and transparency and appears essential to the vision of democratizing access to Diamond.
The latest collaboration between Diamond Standard and Hedera (HBAR) would witness the groundbreaking tokenization of diamonds and the creation of fungible commodities on the Hedera network to enhance transparency and traceability. According to the blog post, Diamond Standard would also leverage the scalability, security, and additional compliance of the Hedera network to remove barriers to the Diamond market.
By #tokenizing diamonds on #Hedera, @DiamondStandard is making the diamond market more accessible, transparent & liquid. Hedera’s scalability, security & regulatory compliance allows Diamond Standard to remove barriers by creating a trusted & efficient ecosystem for investors. pic.twitter.com/ozqQzqumk5— Hedera (@hedera) December 4, 2024
The Diamond Market
In the post analyzed by CNF, Diamonds were described as valuable assets that hold their value during market instability. This implies that they have been proven to be a reliable hedge against inflation. Meanwhile, they have been grossly under-allocated. According to data, only 1% of the $1.2 trillion global supply of diamonds is utilized for investment.
Looking into the reason, we discovered that investing in this type of asset requires a significantly high level of expertise and knowledge. As captured in the post, the asset could have different prices based on quality, clarity, size, etc, unlike investing in precious metals, which have a standardized price. Additionally, they are mostly expensive. After purchasing, storing them becomes another challenge.
Also, they lack transparency, which makes it difficult to evaluate and assess them for potential risks and rewards. Above all, they are illiquid, making it difficult to sell at all times.
Why Hedera (HBAR)?
Tokenizing diamonds on Hedera, Diamond Standard would be able to use the Hedera Token Service (HTS) to ensure that each Diamond Commodity Token genuinely represents a Diamond Standard Coin or Diamond Standard Bar. In this case, the ownership of the Diamond Commodity Token would be linked to the ownership of the physical diamonds.
Upon successful execution, investors could buy and sell the Diamond Commodity Tokens on the various digital asset exchanges.
Technically, the HTS was created to enable Interoperability with other blockchains and protocols. This means that the Diamond Commodity Token could be easily transferred between different platforms. Also, the Hedera Consensus Service (HCS) would be used to create records of all transactions involving the Diamond Commodity Tokens to solve the transparency problem.
Investigating why Hedera was chosen for this significant move, its capability to confirm more than 10,000 transactions per second was found to be one of the main reasons. Additionally, it has a low transaction cost of $.01 per transaction. Apart from its flexibility and security, it has a strong interest in the Environment, Social, and Governance (ESG) ethos.
One final reason that the Hedera network was chosen is that Diamond Standard has a very strong environmental, social, and governance (ESG) ethos, which very closely aligns with Hedera’s dedication to being a carbon-negative distributed ledger. These aligned values made Hedera a natural choice for Diamond Standard.
At press time, HBAR was trading at $0.30 after declining by 5.5% in the last 24 hours. As we recently reported, analysts have tipped the asset to hit $1.
