CEDEX is a new project that is bringing together the conservative diamond industry and the more open and dynamic financial markets. The first ever certified blockchain based diamond exchange, it aims to transform diamonds into a tradable asset class, creating a whole new global financial market.

Since diamonds are traditionally considered to be a reliable store of value world over, you’d be forgiven for assuming that they would already be a popular investment option. So, what’s the problem? Why aren’t diamonds being traded like gold, since they would also serve as a stable hedge against inflation and a great way to diversify a portfolio?

One of the main obstacles to diamond investment is the lack of transparency in the diamond industry. Non- experts are entering a closed off industry that makes it very difficult for them to receive a fair price for their diamonds. Amateurs are faced with significant markups and can lose up to 50% of the value when they sell a stone. This also leads to a lack of liquidity in the market and since every stone is unique, investors have also had no standardized pricing mechanism available to them when buying or selling a diamond.

CEDEX, is bridging the gap between the diamond industry and the modern financial markets by combining a proprietary machine learning algorithm with blockchain technology to provide an answer to each of these challenges.

The company’s blockchain based certified diamond exchange offers the transparent pricing that has been so sorely lacking until now, enabling investors who are not diamond professionals to enter the market and receive a fair price for their stones. Moreover, by directly connecting buyers and sellers, liquidity is enhanced.

However, the main obstacle to diamond investment that CEDEX looks to solve, is the lack of fungibility. Since every diamond is different, a non-professional will have a hard time assessing the objective value of any individual stone. Historically, experts have based their evaluations on the cut, color, carat and clarity but the CEDEX algorithm, known as the DEX offers an entirely revolutionary standardization solution.

The DEX synthesizes data from three sources. It evaluates the worth of each diamond based on gemological data from the GIA, the Gemological Institute of America, diamond indices composite information, that examines market sentiment, through looking at globally published indices, and parallel composite data that assesses the rarity of the stone.

The DEX is revolutionizing the way diamonds are evaluated, providing transparency, objectivity and fairness, and allowing for the creation of a two -sided marketplace.

Up to now, investment has only constituted 1% of the diamond market, with 99% dedicated to jewelry and industrial use for an annual turnover of approximately $87 billion USD. If diamonds follow in the footsteps of gold, with 20% jewelry and industrial use and 80% investment, then conservative estimates place annual turnover at $348 billion USD.

The CEDEX exchange is set to launch in 2018 and is set to completely upend the diamond industry. The exchange will offer a variety of financial offerings including category trading, whereby diamonds are rated and categorized to ascertain a fair market value for each stone. This allows CEDEX to offer a new asset class that open the diamond market to all investors, and not just valuation experts.

CEDEX is also offering shared investment in a single high value stone, enabling partial ownership. In addition, the exchange will allow short selling. A lending company will enable traders to borrow diamonds for a borrowing fee and by putting up collateral. This allows traders anticipating a fall in price to sell their diamonds and then buy them back at a reduced price.

In time, CEDEX also aims to offer baskets of diamonds, otherwise known as exchange traded funds (ETFs) and other derivative products that can be traded similarly to other assets such as stocks and bonds.

Another service provided by CEDEX will be lending contracts, managed on the blockchain for complete transparency. Diamond holders whose stones are in the hands of custodians, will be able to use their diamonds as collateral.

In short, CEDEX is set to dramatically increase the revenue potential of the diamond industry, driving growth and offering traders a new investment opportunity with which to diversify their portfolios.