BitGem Asset Management Ltd. (BAM) and its parent company, Precious Investments Inc., will launch a crowdsale for what they call the first diamond-backed cryptocurrency, PinkCoin, an Ethereum-based cryptocurrency backed by a pool of fixed-colored diamond assets. The crowd sale begins on Jan. 18, 2016 at 9 a.m. The escrowed diamonds are insured by Lloyds of London and have been independently appraised.

A PinkCoin token initially will represent a fraction of the diamond pool’s set valuation. The fraction will represent 1 USD of the initial set valuation.

The companies said the diamond pool will be valued on a regular basis.

Redeemable For Bitcoin

PinkCoins can be redeemed for bitcoins or individual gems based on the pool’s current valuation as described in the terms of the crowdsale [PDF]. Initially, the crowdsale will include 5 million PinkCoin tokens with the asset pool valued at $5 million USD. BAM can issue up to 95 million new PinkCoin tokens in future offerings in a non-diluted manner.

PinkCoin holders will be able to trade the currency for other assets and asset-pool-backed tokens on The BitGem Decentralized Marketplace. The marketplace is expected to be available in the second quarter of 2016.

Users can trade PinkCoins with any exchange provider or wallet supporting tokens that enable token trading and follow Ethereum’s standardized contract APIs, including Ethereum client implementations.

A Rising Commodity Value

Colored diamonds are the rarest commodity in the world and the most concentrated form of wealth, said Dr. Nataliya Hearn, CEO of Precious Investments Inc.

“The current global yield of colored diamonds mined per year will slow down significantly as the largest producer, the Argyle mine in Australia, which produces 90% of the world’s pink diamonds, is already scheduled to close in the next decade,” he said. The declining yield is occurring as the demand from the jewelry industry continues to rise.

Pink and other fancy-grade-colored diamonds are the only class of assets that has increased in value consistently over 10% per year, he added. These diamonds are the only commodity that has not fallen in price since tracking began in 1959. “This will only enhance the validity of PinkCoins in the marketplace,” Hearn said.

Blockchain technologies are the “next evolutionary leap” in e-commerce, the companies noted. The technology allows large numbers of people to invest in this class of assets with fractional ownership in addition to other advantages. It also allows for easy cross-border trade and provides liquidity. Blockchains bring programmable contracts with applications such as smart investment plans.

Also read: Bitcoin for diamonds anyone?

An Online Diamond Marketplace

Kashif Khan, president of Precious Investments Inc., predicted the BitGems decentralized platform will become the leading marketplace for the online trading of diamonds. The PinkCoin launch will alert diamond market participants to the opportunities of decentralized commerce.

BAM’s goal is to bring global reach, liquidity, provenance and fraud control to the wholesale jewelry trading industry, according to the company announcement. It seeks to accomplish this goal by developing an online marketplace for trading jewelry-related assets using blockchain and related technologies.

Precious Investments Inc. trades on OTC Markets under the symbol PNIK. The company entered the color diamond trading business after buying a wholesale colored diamond portfolio for $4 million USD.

Images from Shutterstock and BAM.