Investing in Tokenized Assets: Diamonds

Investing in Tokenized Assets: Diamonds

Precious gems like diamonds have historically been reliable investments. The monetary value of precious stones has proven the most stable during global crises. However, the market for precious metals and gemstones faces major hurdles in the form of counterfeiting and theft. Investing in tokenized assets is growing in popularity and can address a number of these issues.

The encouragement of physical diamonds is one of the most innovative applications of blockchain technology. Tokenized diamonds are more liquid than other forms of valuable ownership because security tokens can be vulnerable to steady and worldwide trading. Tokens are also far safer than precious metals and diamonds, which are always at risk of being tangibly stolen. Tokenized diamonds and precious metals will attract more investors due to their secure preservation, outstanding liquidity, and frequent third-party audits.

Investment in Tokenized Diamonds

Not only are diamonds someone’s dearest companion, but they are also a symbol of wealth and authority. However, the industry encounters significant challenges:

  • Insufficient liquidity
  • Inaccurate pricing
  • Unreliable control of diamonds
  • Fake diamonds

How will tokenization affect the diamond industry?

Combining the two main blockchain advancements (tokens and smart contracts) with the multibillion-dollar diamond industry could result in the prosperous growth of investing in tokenized assets. The global market size for tokenization reached $2.28 billion in 2023 and is projected to grow at a CAGR of 23.4% over the forecast period. Tokenization market revenue growth can be driven by the need to remain legal and meet regulatory reporting requirements.

By enabling individuals to add tokenized diamonds to their portfolios, diamond tokenization initiatives seek to alter the current market. In addition, the aim is to establish a secondary market. Here are the stages for tokenizing a diamond:

  • Assuring the diamond’s suitability: tokenization companies have varying requirements for diamond cut, clarity, color, and carat.
  • The transmission of a GIA certificate number and Ethereum public key to an entity that tokenizes assets. If confirmation is received, tokenization will begin.
  • Creating an ERC72 token and transmitting it to the Ethereum blockchain public key address. The stone is now associated with a diamond token.
  • List a token for sale on an exchange such as if you wish to sell it. The diamond itself is transferred to the new token holder upon sale, but it remains to be stored in a safe place.
  • If necessary, the owner of the diamond token can cash it out for a modest fee and shipping costs.

Learn more: LCX

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