Two leading diamond industry players have agreed to work with blockchain startup D1 Mint Limited to tokenize diamonds, according to a press release shared with Cointelegraph.

D1 Mint Limited, the creator of the diamond-backed crypto asset D1 Coin, has signed its first purchase agreement to buy 1,500 investment-grade diamonds, worth $20 mln, from global veteran KGK Diamonds. The raw diamonds were supplied by the largest diamond mining company in the world, Alrosa.

Alexei Chekunkov, a member of Alrosa’s Board of Directors, said the company believes that the innovation of blockchain can transform the precious gem industry by making natural diamonds into an investment asset class with wider appeal across “various investor groups, driv[ing] higher demand.”

The diamond industry has seen stagnating demand among retailers, with spending on diamond jewelry staying flat at around $80 bln a year since 2014, according to a De Beers study.

D1 uses a pricing algorithm to determine the price at which crypto investors can redeem their tokens for selected diamonds from their diamond reserve at any given time, using the new technology to translate traditional industry parameters of value - such as shape, carat, cut and clarity.

Beyond broadening investment appeal, the diamond industry is making use of blockchain to achieve transparency across the gem supply chain. Earlier this month, global diamond giant De Beers successfully used blockchain technology to track 100 diamonds from mine to retailer. The company said that blockchain can be used to secure public confidence that their supply chain is free of so-called “conflict diamonds” - uncut diamonds mined in war-zones that are illicitly traded to fund fighting.

Also this spring, IBM partnered with gold and diamond industry leaders to develop a similar blockchain network to trace the origin of precious metals.