Bitcoin Tech Used to Combat Diamond Fraud

Technology
01/07/2015 10:12

A new fraud detection company called Everledger is utilizing Bitcoin blockchain technology to prevent insurance fraud. How will they do it? The company focuses on 40 metadata points in addition to the 4Cs (color, cut, clarity and carat weight) that identify a diamond. Laboratory houses digitize a diamond on the basis of these parameters and Everledger then takes the digitized data and the serial number (inscribed on a diamond), and puts it all on the Bitcoin transaction ledger blockchain. Blockchain, a public ledger, cannot be altered like paper bills and receipts, and thus can prevent frauds and false insurance claims. In London alone, diamond frauds account for $2 billion.

At this point Everledger is focusing on getting diamond pipeline producers and major insurers adopting its system. A third target is big online retail marketplaces where people might try to offload stolen or counterfeit goods. It now has some 280,000 diamonds digitized and embedded into the blockchain (it’s working its way through 850,000 diamonds submitted so far for adding to its ledger), and has all the major certificate houses signed up, plus four of the major London-based insurance companies. It’s starting with diamonds, with a view to expanding into all sorts of luxury goods — such as high end watches, designer handbags and fine art.