(photo credit: INGIMAGE)
Since the dawn of time, diamonds have exerted an incredible fascination on human beings. The name derives from the ancient Greek word adámas , which means “proper, unalterable, unbreakable, untamed.” The discovery in the 19th century of massive diamond reserves in Africa, along with improvements in cutting and polishing techniques, made these solid carbon crystals synonymous with value, much in the same way gold was reserved for alchemists in the Middle Ages but became money once massive reserves were found in America.
Because the massive influx of diamonds came centuries after the influx of gold, the diamond industry developed more sophisticated ways to profit from this natural resource. Instead of stor ing diamonds in the vaults of national banks, the diamond industry came up with a utility for its product: jewelry – and private vaults – kept surplus stones away from the market.
With the monopoly of a single company and Madison Avenue slogans like “Diamonds are forever” the stones became perhaps the most valuable and stable resource on the planet.
Redefining value was a big part of the cryptocurrency revolution, started by Satoshi Nakamoto. Central banks print money out of thin air without the gold reserves to back them up. The value of a dollar is thus merely a convention. The same applies to the value of most cryptocurrencies, like Bitcoin and Ethereum, that is, their value is also based on a convention asserted by exchanges and not tied to the value of a product. That makes cryptocurrencies too volatile for mainstream adoption.
Probably inspired by his own name, Gabriel Diamant, a licensed investment consultant and mentor at the Technion’s start-up accelerator, thought there could be a way to connect the blockchain – which manages the database that records Bitcoin transactions – with diamonds. Diamant reached out to his friend Avishai Shoushan, the CEO of the mobile company AppGrade. The idea of the two Israeli entrepreneurs was simple: Capitalize on the Start-Up Nation’s long-term relationship with the diamond industry and come up with a solution for the volatility of cryptocurrencies. Together in 2017 they came up with the idea of the first cryptocurrency that would combine the stability of diamonds with the liquidity of cryptocurrency.
“We want to commoditize the diamond market,” said Shoushan. They decided to call the new token Carat, and they want to connect its value to the value of diamonds, and have that value reflected in cash equivalent reserves in investors’ vaults
Diamant and Shoushan are in the right place to do so. Ramat Gan houses a boosting tech center as well as one of the world’s biggest diamond exchange districts in the world, known as the “Bursa.” The price stability of diamonds might make Carat a very stable token. Why? Diamonds are the only major commodity without an established financial market. Seeing as the diamond market is currently worth approximately $80 billion a year, its untapped secondary market is easily worth several-fold more.
There is a lot of optimism in Israel about this revolutionary token. Moshe Asher, the head of the Israeli Tax Authority, has met the team. Some wondered if the aging investors of the diamond exchange would endorse the new coin. But the reception has been surprisingly good thus far. As the founder of Infinite Diam Patrick Saada, a well-known veteran of the diamond sector, explained: “I’m extremely excited by the opportunities presented by Carats’ initiative to integrate the diamond industry on the blockchain. In my opinion, Israel’s famed ‘Bursa’ is an ideal location to see this initiative gain traction and prove its real-life use.”
The pre-sale of the Carats token began in early April. It raised $1.6 million in the first financing round and the company says that they are registering large subscriptions for the token through the Carats website. These numbers raised hopes for the coin creators, since there won’t be a cap to the number of coins being issued.
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