The diamond industry has been booming for many years, and studies showcase that consumer demand for diamonds is of 95% whereas the remaining 5% accounts for investment demands. However, as diamond prices may change during the next few years, they can become an interesting investment possibility.
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CEDEX represents the world’s first certified, blockchain-based diamond exchange, here to bridge the gap between the diamond industry and the investment market. To help learn more about the company and its upcoming platform, The Merkle has conducted an interview with Saar Levi, the CEO of CEDEX.
Q: How would you describe CEDEX in one sentence?
A: CEDEX is the first Certified Blockchain Based Diamond Exchange.
Engineering a ground-breaking change – enabling people to liquidate and invest in diamonds like any other financial asset, in a transparent and secure way.
Q: What made you get involved with the Diamond industry?
A: The founders of CEDEX have collective experience from the diamond industry, financial industry and the online technology markets. This mixture of accumulated knowledge has evolved into a dedicated ground-breaking project called CEDEX.
The company identified that while high-end buyers and investors have been keeping the top-end of the diamond market strong, there are three major issues hindering diamonds as an alternative investment class for general investors:
Lack of transparency – The diamond industry lacks clear and transparent pricing, as well as a C2C trading platform. Markups, list prices and a “closed shop mentality” make it very difficult for anyone “not in the know” to understand how a diamond is valued and how to gauge its true worth.
Lack of liquidity – Diamonds are mainly sold to end consumers in a one-sided transaction. This skewed market automatically places anyone who owns a diamond at a severe disadvantage if they want to resell their stone. The current market structure is designed to ensure consumers can only resell their diamond at a substantial loss, often up to 50%.
Lack of Standardization – Unlike gold, platinum or silver, diamonds are not fungible – each diamond is unique.
By removing the three main obstacles the CEDEX (Certified Blockchain Based Diamond Exchange) will disrupt the way diamonds are currently perceived. Using innovative propriety technological solutions – including emerging blockchain technology – CEDEX will create an open and transparent marketplace in which anyone will be able to liquidate diamonds or invest in diamonds as a new financial asset class.
The more the company looked in-depth on what’s preventing the diamond industry to integrate with the financial eco-system, the more fascinated we became we the rare opportunity to make a game changer and bridge the gap between the traditional diamond industry and the innovative financial markets. Our goal is to engineer a ground-breaking change, enabling people to liquidate and invest in diamonds like any other financial asset, in a transparent and secure way.
Q: What is the state of the CEDEX exchange as of right now? When is it scheduled to go live?
A: CEDEX is built on four pillars: The DEX proprietary technology, blockchain technology, diamond tokenization and the CEDEX Coin.
The DEX, CEDEX’s proprietary machine-learning algorithm, addresses the most significant obstacles in transferring diamonds into an asset class i.e. lack of transparency and coherence in diamond value appraisal.
The DEX takes gemmological data, diamond financial indexes data and global inventory data into consideration. Utilizing the global diamond inventory data, the DEX quantifies diamond prices and ranks individual diamonds and their respective prices. Briefly, machine learning allows software applications to accurately predict outcomes without being explicitly programmed. Machine-learning algorithms receive input data and apply statistical analysis for predicting an output value within acceptable ranges.
The DEX comprises three elements; the first is the gem composite, expressed in percentage terms and representing a diamond’s gemmological perfection. The second DEX element is the parallel composite indicating the rarity of a diamond category as well as the available quantity of diamonds in the relevant category. The third DEX element is the indices composite, giving investors market directions for the diamond industry.
Using the DEX, investors can base their investment decisions on analytical data, which has not been available so far. In so doing, investors/traders are able to answer the question of which diamond represents the best value for money.
A beta version of the DEX is already available on www.cedex.com for 0.3- 0.5- and 1-carat round diamonds, we have already reached 35 to 40% of targets. To maximize accuracy, CEDEX is developing the DEX towards pricing additional types of diamonds. The accumulated data is continuously analysed and supplied to the pricing algorithm. The DEX has the goal of pricing any certified diamond at an accuracy rate of more than 99.5%.
In the near future we will also start releasing additional features form the DEX – so stay tuned!
The company intend to be fully live with CEDEX and running at the beginning of Q3 2018
Q: What made you decide to use CEDEX coin instead of integrating the platform with an existing cryptocurrency such as Ethereum or Bitcoin?
A: The CEDEX Coin is implemented as an ERC20-compatible token over the public Ethereum blockchain. Activity on cedex.com, and later on within the diamond ecosystem, is performed solely using CEDEX Coin. This will make the Token an integral part of the CEDEX platform and the driver of its economy.
One of our goals in transforming diamonds into an asset class is to develop financial products that would give an investor a variety of tools to invest and optimize his portfolio, such as the ability to leverage and take loans against his holdings, this flexibility is possible only with CEDEX Coin.
Q: Anything exclusive you could tell us about CEDEX that nobody else knows? Could you provide us any screenshots of sneak previews of the platform?
A: We are in contact with some of the biggest companies both from the diamond and blockchain industry who are showing a lot of interest in the project, and we hope to bring new and exciting partnership in the near future.
As seen in the screen shots, The CEDEX platform gives investors a clear view of possible financial offerings without the need for extensive knowledge about diamonds.
The trading platform screenshots below illustrate the methodology that enables investors to choose either an investment range or an investment category. The DEX algorithm displays diamonds, listed in sequence by “best-value investment” from top to bottom.
In addition, the system provides investors with financial and gemmological data, allowing them to gauge the investment potential in parallel to the DEX recommendation.
Based on everything that has been outlined so far, CEDEX holds big potential and hopes to attain a large portion of the diamond investment market once interest peaks. Through its extensive number of features, the platform may just become the go-to exchange for all diamond-related investment activities.