Icecap has introduced Non-Fungible Tokens that represent unique diamonds on the OpeanSea digital marketplace
Icecap has introduced Non-Fungible Tokens (NFTs) that represent individual diamonds. Unlike gold, or other metals, diamonds derive their value from unique characteristics — perfect for Ethereum-based NFTs.
NFTs are a good fit for digital diamond trading, as they can be created to represent a unique item, and be recorded on a decentralized blockchain. In this case, the Ethereum blockchain powers Icecap’s diamond-backed NFTs.
Jacques Voorhees, the CEO and founder of Icecap, commented,
“All the efforts to try to create fungibility with a non-fungible item, have ended up failing. And even though they’ve thrown blockchain technology at it, they still have yet to meet with success…I’ve seen this going back all the way to 1972 when the West Coast Commodities Exchange tried to create fungibility and diamond futures contracts. The thing lasted about three days and the market fell out because the contracts weren’t actually similar.”
Icecap appears to have solved the problem with Ethereum
In addition to tokenising diamonds, Icecap has also addressed one of the issues that comes with trading gems. Before a diamond is tokenized, it will receive a certification from the Gemological Institute of America (GIA), and is then audited by the Gem Certification & Assurance Lab (GCal).
The net result of this is a guarantee that seems to eliminate any risk of overvaluation, at least based on the quality of the diamond.
A new market for retail diamond traders
One of the biggest issues for anyone who isn’t a part of the commercial diamond market is the lack of a secondary market. Unlike other commodities, diamonds aren’t widely traded at a retail level as there is no central clearing authority for the stones.
Most of the liquidity is tied up in large diamond trading entities, some of which produce the stones; so there is very little reliable pricing information.
It would appear that Icecap has addressed both of these issues, and could be at the centre of a new age of diamond trading. Voorhees doesn’t foresee any major issues with existing regulations and has a team of lawyers who have helped to make these new NFTs a reality.