D1 Coin will offer investors straightforward access to diamonds as an asset

Spreads on diamonds are traditionally wide, and investors rarely get access to wholesale prices

Investing in diamonds as an asset class isn’t easy.

There are the diamond miners, of course, but these are subject to operational pressures as margins rise and fall with grade and favourable sentiment ebbs and flows.

to be officially launched later this year​

Diamond ETFs and unit trusts have been tried too, but these have proved unwieldy and failed too, since each diamond is different.

A single carat of one stone may hold a widely disparate valuation from a single carat of another stone – it’s not like the gold space at all, where the price for an ounce of gold is the price for an ounce.

Until now, the prospect of creating an investible vehicle for diamonds as an asset class has been elusive.

But the rise of cryptocurrencies has changed all that. And now a new opportunity is emerging, one that can tie an investment to diamonds directly to specific cut and polished stones.

, a diamond-backed token is to be officially launched later this year.

Its founder, Hogi Hyun, is an experienced fund manager from Singapore with an instinctive understanding of how high net worth individuals and institutions want to husband their assets. Some of them, he says, want to keep some of their assets outside of the banking system. And with the history of the financial markets over the past decade and a half in mind, it’s not hard to see why.

There is physical gold, of course, and gold-backed instruments. But the physical is actually immensely heavy, and hard to move around in significant quantity. Diamonds, on the other hand, are relatively light and can store a huge amount of value in a tiny space.

With the liquidity that crypto can offer, it seemed a natural next step to create a diamond-backed crypto, and hence D1 was born.

“It was an 18 month journey to create D1,” says Hyun.

“We had to hire the team to create the token.”

That in itself wasn’t a simple task as the blockchain technology in question is being used not only as a ledger for trades, but also to create a ledger for each individual diamond.

The idea is simple. The D1 token is issued at a dollar price, and until the investor chooses to exchange for actual diamonds, all he or she is holding is a token, pegged to one-thousandth of the value of a one-carat diamond. Tokens are only issued when new diamonds are added to the company’s portfolio.

But at the moment of exchange, the investor can then choose to reserve diamonds from an extensive portfolio of physical stones that D1 will be holding.

At this stage, it’s likely these will be sourced from Alrosa. “Alrosa is interested because it pushes up demand,” he says. If supply is taken out of the market, then prices are likely to firm.

Token pre-sale started on 15 October​

But the key point from the investor perspective is that D1 will be able to acquire cut and polished stones…

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