Blockchain Fintech Middle East & Africa Spotlight

The Diamond Industry and Blockchain: Dubai As The Meeting Point for Innovative Pairings

The largest city and commercial hub of the United Arab Emirates (UAE), Dubai, has become an undisputed leader in many sectors in the Middle East and Africa (MEA) region and beyond – from transportation and logistics to tourism to finance and fintech – it can now add the diamond industry.

At a recent private event at the posh Ritz Carlton in the heart of Dubai’s financial district, Dubai International Financial District (DIFC) was the celebration of the move of an American diamond company called Icecap LLC to Dubai. The company is the brainchild of the father/son team of Jacques Voorhees, who revolutionised the diamond industry in the 1980’s by introducing online trading technology via Polygon, and Erik Voorhees, a renowned bitcoin advocate and founder of ShapeShift.   In the small private event were various people from across a wide range of industries. However, what from the surface seemed an odd pairing was how blockchain and the diamonds were the focus, other than of course the American company moving its headquarters to Dubai.

Dubai is the commercial hub and largest city of the United Arab Emirates (UAE)
Dubai is the commercial hub and largest city of the United Arab Emirates (UAE) IMAGE SOURCE GETTY

Upon discovery, the pairing of diamonds and blockchain (and by default fintech) didn’t seem so strange. The company has mentioned they are the first company to offer diamonds via NFT “token” technology. It was not just a celebration and announcement of them moving their headquarters to Dubai within Dubai Multi Commodities Center (DMCC) but also launching a line of high-end diamond and jewellery collectables. The tokenised “Icecap Collectibles” will include very high-end, natural diamonds in red, yellow, green and other colours, plus unique finished jewellery pieces, such as a $3 million red diamond.

It was also pretty exciting to see private events happening again due to the COVID-19 situation globally. Therefore, it was nice to see an event like this happen which the host city and country has, throughout the pandemic, had relatively handled the pandemic well; it even has one of the world’s highest rate of vaccinations in the world.

In 2019, the gemstone that many perceive as beautiful had around 142 million carats of diamonds produced from mines worldwide. Australia, Canada, the Democratic Republic of Congo, Botswana, South Africa, and Russia are major producers of the precious gemstone with worldwide reserves are estimated to be some 1.2 billion carats.

In terms of global trading hubs of diamonds, Antwerp is often regarded as a major hub. According to Antwerp World Diamond Centre, the city in Belgium has been a major diamond trading hub for the past five centuries. In addition, Israel’s commercial hub and largest city, Tel Aviv, is another major diamond hub. The Tel Aviv Diamond Exchange, also known locally as the ‘Bursa,’ is the world’s largest diamond trading complex. Exporting approximately $5 billion a year and employing over 15,000 people, it is estimated that around half of the world’s diamonds pass through the Bursa.

The growth of Dubai has allowed it to also secure its seat as well in terms of the diamond industry. According to the DMCC website, Dubai in the last 15 years has positioned itself as the world’s third-largest diamond trading centre. It is no secret that Dubai has been a global hub for trade throughout its history and this is particularly evident in recent memory.

Also, the famous city – known for its luxury and biggest this and tallest that – such as the world’s tallest building the Burj Khalifa to world-renowned Dubai Mall to Dubai International Airport – doesn’t seem be an odd pairing to add diamond trading hub as another accolade.

Dubai has become a major diamond trading hub, joining the ranks of Antwerp and Tel Aviv
Dubai has become a major diamond trading hub, joining the ranks of Antwerp and Tel Aviv. Its position as a leading blockchain innovator can help accelerate that. IMAGE SOURCE GETTY

Dubai is already leading in blockchain and fintech. As per a recent report by The Fintech Times called Fintech: Middle East and Africa 2021, the UAE, alongside Israel, were the only two countries in the MEA region to be considered premier fintech tier-one hubs. This is a combination of many factors from wider economic development to tech and fintech-specific indicators.

The Fintech Times MEA 2021 report also highlighted that the UAE Government adopted blockchain technology in conducting its transactions and overall is prioritising it. To aid this move, it launched the Emirates Blockchain Strategy 2021 and Dubai Blockchain Strategy. As a whole, the Gulf Cooperation Council (GCC) region – UAE, Saudi Arabia, Qatar, Oman, Bahrain and Kuwait – have top-level strategies looking to diversity their economies and digital transformation plays a strong foundation in that; 2021 and beyond will see further developments and implementations of that.

In terms of real-life foreign direct investment (FDI) and wider investment, recent ones also include IBMC Financial Professionals Group, an internationally recognised financial services institution and business consulting firm, joining forces with US Gold Currency Inc and Blockfills to bring the world’s first monetary gold-backed digital gold currency to the GCC and MEA region.

Despite the challenges of COVID-19, the diamond industry appears to have kept its resilience and seen interest from buyers. The demand has been being driven by bumper recent holiday jewellery sales, particularly in key markets mainly the United States and China. This has been the growth of e-commerce as a whole, which the pandemic further fueled due to lockdowns and lack of people, particularly last year who couldn’t travel, channelled their time and money to online shopping.

Back at the private event in the Dubai hotel, the CEO of Icecap, Jacques Voorhees, explains, “NFT technology has opened up diamonds as an asset class for diversification. Diamonds typically out-perform inflation, but now—with NFT technology—diamonds can be bought, sold, and traded almost as efficiently as gold and silver.  Thanks to NFTs, we might say the world’s hardest asset is now liquid. Interest in diamonds as an investment goes back over a thousand years. But, diamonds are not fungible—each one is unique.  The technology of non-fungible tokens now makes it easy to trade this asset class without the friction of having to track the physical product itself—which is kept secure, vaulted, and insured.”

As highlighted by Voorhees at the event and following trends, developments last year and present have also accelerated Dubai as a hub in regards to diamonds. First, the Abraham Accords, the establishment of diplomatic and economic relations between the UAE, Israel, Bahrain (and later Sudan and Morocco) have allowed the UAE and Israel to conduct business officially, which can see a wide range of sectors – from agriculture to fintech to wider tech and diamonds – benefit. As highlighted, the Startup Nation of Israel is not only a leader in fintech, tech but even in the diamond industry. Second, the embracement of the UAE as a whole in digital transformation has allowed it to be not only the leader in the Arab World but even a global contender and thought leader in its own right.

The benefits of blockchain can be that it can provide a means of securely recording the provenance of diamonds, as well as other goods. Users can easily view the movement of a product recorded on the chain from its source to the present. A transparent relationship adds value to the product at each point in the supply chain. Therefore, it is companies such as Icecap who are aiming to lead the front by incorporating what initially are two different pairings.

Diamonds are a timeless gem that many regard across the world. Blockchain and wider fintech is one that has also been embraced by many. Therefore, their pairing might not only seem to fit but be innovative in the ever-changing world we all live in.

Authors

  • Head of Middle East and Africa (MEA) | Contributor

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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