By Bitcoin.com PR — Dec 15, 2017 0 2014
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There are well established markets for trading the vast majority of commodities that are significant to the global economy. This includes everything from oil to gold to even soybeans. But there is one major commodity for which that isn’t true – diamonds.
That’s finally going to change in 2018 with the launch of CEDEX, a decentralized diamond exchange that will transform diamonds into a tradable asset.
Diamonds have been a steady store of value throughout modern history, similarly to gold and other precious metals. The problem is that very few people have access to the diamond market. This is primarily a consequence of three factors specific to the diamond industry: lack of transparency, lack of liquidity, and lack of standardization.
By solving all three of these issues, CEDEX has built a bridge that will connect the diamond industry to innovative financial markets. Before discussing that solution, though, it’s important to understand the problems.
First is the lack of transparency. How can you determine what any given diamond is worth? Unless you’re an expert, the answer is that you have to take it to a professional appraiser. The appraiser will then evaluate the diamond and try to gauge its true worth, a somewhat subjective process that may be inconsistent from one appraiser to the next. As a consequence, there isn’t clear and transparent pricing for diamonds and general investors can’t purchase them with any confidence.
Even if the lack of transparency were solved, investors would face another serious problem – lack of liquidity. While diamonds are a durable good, they are mainly sold to end customers in a one-sided transaction. As a result, diamond owners can’t expect to resell their diamonds for anything close to fair market value. In fact, diamonds are usually resold at a loss of 30% – 50%. This leaves no incentive for general investors to even consider diamonds.
The third problem is a lack of standardization, or fungibility. One gram of gold has the same value as any other gram of gold, but the same can’t be said for diamonds. Each one is unique, and its value must be assessed using multiple metrics. Professional diamond appraisers know these metrics best, but they still can’t achieve anything close to perfect standardization.
Those are the three big obstacles that need to be overcome in order for diamonds to finally join the rest of the major commodities with established markets for trading them. By doing so, a market with incredible potential would be unlocked.
Overcoming those obstacles isn’t going to be easy, but CEDEX has developed the solution to make it happen. The first critical part of that solution is bringing together the two sides of the diamond market. That will happen on CEDEX.com, the decentralized exchange platform that runs on CEDEX coin. CEDEX coin is an ERC-20 compatible token that will be traded on the Ethereum blockchain, allowing users to easily transfer their capital between diamonds, cryptocurrencies, and fiat currencies.
On the supply side of the market, existing diamond dealers will use CEDEX as a new distribution channel. Private holders, meanwhile, will have their first opportunity to resell their diamonds at fair market prices.
The demand side of the market will be almost entirely new. General investors and cryptocurrency investors alike will have access to diamonds as a means of hedging against inflation, the stock market, and volatility in other crypto coins. For investors who question how digital assets have any value, CEDEX coin can even serve as an entryway into the greater cryptocurrency markets.
What about the lack of standardized and transparent pricing, though? Enter the DEX – CEDEX’s proprietary machine learning algorithm. The DEX was designed to evaluate diamonds transparently and coherently at a pricing accuracy rate of over 99.5%. As it’s available on the CEDEX platform, this provides anybody with a means of accurately appraising a diamond’s value without taking it to a professional appraiser.
Diamonds are appraised by the DEX according to three main criteria. They are assigned a gemological purity “score” based on data collected from the Gemological Institute of America (GIA). Additionally, the DEX analyzes each diamond’s parallel composite and indices composite. The parallel composite indicates how rare the particular diamond type is, while the indices composite gives investors insight on current market sentiment.
With the DEX, the days of human subjectivity being a part of diamond appraisals are soon going to be a thing of the past. If somebody is given the choice to trust a human they’ve never met before or a piece of open-source software that is transparent and trustless, they will choose the later. Trustlessness is a fundamental feature of cryptocurrencies that makes them valuable, and it is equally important to the CEDEX platform.
A beta version of the DEX is already available on the CEDEX platform so that you can try it out for yourself. You can also find more information there about registering for the CEDEX Token pre-sale, which will start on January 12th of 2018.
People have been trying for a long time to create a tradable market for diamonds. Now, CEDEX has developed the technology and know-how to actually pull it off. This is the kind of opportunity that doesn’t come around very often. To learn more, visit CEDEX.com where you can watch introductory videos and read the technical whitepaper.
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