The World’s Blood Diamond Watchdog Is Looking to the Blockchain

But can new technology fix a broken process?

Jordan Pearson

Jordan Pearson

Image: Shutterstock

World leaders have been working together to eliminate the global market in blood diamonds—stones that fuel violent conflicts through their sale—for over a decade, but they continue to be bought and sold.

Now, the Kimberley Process (KP), an international organization that oversees the diamond trade, is hoping that the technology behind bitcoin, the blockchain, can plug the leaks. But as many critics have noted over the years, the Process has many serious problems of its own that might not be solved by new technology.

Fake diamond certificates have been used to set up advance-fee scams

The bitcoin blockchain is an internet-based bookkeeping system. Whenever a transaction is made, it gets placed in a "block" of data and included in an ever-growing chain, which is continually downloaded onto every bitcoin user's computer. The blockchain is publicly viewable, meaning that it's not only extremely transparent, but can never be altered.

Users can also add text to bitcoin transactions—in the case of the diamond trade, this might be a certificate guaranteeing that a specific shipment is conflict-free—which becomes part of the blockchain's public and unchangeable record.

A new report from KP notes that implementing blockchain technology would "help to eradicate false KP certificates and reduce the impact of human error while uploading data significantly." The report also states that the current KP chair, Ahmed Bin Sulayem of the United Arab Emirates, "engaged with blockchain technology providers to adapt this technology" to the diamond trade, suggesting they're taking this seriously.

The KP works through a so-called "system of warranties," whereby every government must provide a written guarantee that shipped gems aren't involved in funding conflict. The 81 participating countries, which account for roughly 99 percent of the world diamond trade, also only deal with each other. (In Canada, most of the diamonds sold are domestic, and the rest are ensured by KP safeguards, a government spokesperson told me.)

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However, critics have noted that the KP system is far from perfect, and has historically been rife with abuse. In 2011, non-profit Global Witness, a one-time supporter of the KP, announced it was leaving the Process, calling it "stuck in time."

Between 2004 and 2010, the US collected more than a dozen fake KP certificates from countries including Ghana and Sierra Leone. Sometimes, these fake certificates were used to set up advance-fee scams. In one "elaborate scheme," the US State Department noted in 2014, potential buyers were invited to Sierra Leone to view rough diamonds with a KP certificate. The diamonds and the certificate were fake.

If governments were to issue certificates and upload them to the blockchain, checking their legitimacy would be much simpler than it is today—as easy as going to a site like blockchain.info and checking that the transaction containing the certificate text did in fact originate from a known government source.

Many critics have noted serious issues with the KP's self-policing system. Namely, a lot of governments just don't give a shit. Venezuela left the KP in 2008 after years of, according to Canadian organization Partnership Africa Canada, "illicitly" mining diamonds and smuggling them abroad for certification. The KP is now considering letting Venezuela back in.

Its narrow definition of conflict diamonds—that trade in these precious stones supports rebel factions—also allowed Zimbabwe to sell certified diamonds, even though their sale propped up the regime of dictator Robert Mugabe.

These issues are unlikely to be solved by some fancy new technology, especially one that only serves to memorialize government certificates that may be utterly corrupt and valueless to begin with.

For a system "stuck in time," however, the blockchain might just be a good first step.