Is It Possible To Use NFTs For Luxury Jewelry?
Jacques Voorhees and his bitcoin entrepreneur son Erik were having breakfast together one morning when Jacques suddenly realized a solution to a long-term issue hurting the diamond industry. As Jacques puts it, he was on the verge of falling out of his chair.
The result is Icecap, a firm that is the first to use NFT technology to supply investment-grade diamonds. NFTs, according to Jacques Voorhees, the company's new CEO, fix a problem that has plagued the diamond industry for years. Diamonds, unlike gold and silver, are not a tradeable and liquid asset class. A diamond loses value as soon as it leaves a jeweller's store, and may only be worth half of its original price.
NFTs, or non-fungible tokens, have taken the art world by storm. They're now making inroads into the world of diamonds, as well as luxury jewelry and heirlooms in general. According to Vogue Business, Asprey, a British jewelers with a royal warrant, is intending to release NFTs. They'll be sold as a digital physical pair, which means the buyer will get both the real thing and its digital NFT equivalent.
NFTs and jewels and heritage artifacts, according to Asprey executive chairman John Rigas, are an ideal combination since NFTs strengthen the validity of the items by recording their ownership history and ensuring their authenticity. "When the information is part of a blockchain, NFTs are excellent for us since they preserve everything about the product, forever," he explains.
Asprey aims to introduce a line of digital-only NFTs, comparable to the NFT artwork that is now being offered, in addition to the NFTs attached to tangible works.
Other well-known jewellers aren't following Asprey's example just yet. Cartier's worldwide innovation director, Timothy Iwata Durie, is apprehensive.
“We, at Cartier, believe much of what we’re seeing is hype,” he says. “First and foremost, we don’t want our customers subject to the price volatility that we are seeing in the marketplace today... We are taking our time to explore jewellery-related NFT use cases that create concrete benefits for our clients.”
Cartier remains optimistic in blockchain technology. The Aura Blockchain Consortium, which uses blockchain to track a luxury good's product history and provenance, was recently launched by Richemont, Cartier's parent company, together with LVMH and Prada Group. To make it easier to trace a particular luxury item, an NFT is established on the Aura blockchain. An Aura NFT, on the other hand, is not yet tradeable on the open market; it was designed just to monitor data.
One of Cartier's initial applications of Aura was to keep track of jewelry that was being repaired. When a consumer sends a component back for repair, the Aura blockchain creates an NFT for that item. All repair updates are recorded in Aura and available to the consumer. Diamond traceability was another early use for Cartier. Cartier collaborates with diamond supply-chain partners to collect crucial data at the point of origin and record it into Aura, ensuring long-term authenticity and traceability.
Aura is a fantastic match for companies, according to Iwata Durie, since it is a private blockchain, which means each member can only access their own brand and customer data. He claims that the private blockchain feature decreases energy use.
Jacques Voorhees of Icecap claims he has invented a new form of diamond marketplace. "We can create a tradeable representation of the diamond on the blockchain using NFTs, which can then be freely exchanged while the diamonds stay secure in a vaulted environment," he explains. "This allows the diamond to be purchased and sold at the same price, resulting in a two-way, publicly available marketplace for investors."
Icecap is offering NFTs of "investment-class" diamonds priced between $5,000 and $15,000, as well as unique items including a necklace with a 70 carat diamond priced at $3.6 million and a ring with a rare purplish-red diamond priced at $3 million.
All actual diamonds are kept in a vault, where they are insured and audited on a regular basis. The possession of an NFT is a "IOU" of the item, which may be freely sold online. If the buyer of the NFT desires actual access to a piece of jewelry, the NFT may be redeemed by returning it to Icecap, which will recover the item and deliver it to the consumer. It may be replicated as an NFT for continuing trade after it has been redeemed, subject to scrutiny.
Christie's, an auction house in the premium segment, is another company paying careful attention. "Blockchain is on the edge of being interwoven into every single creative business that exists on Planet Earth," says Noah Davis, Christie's resident NFT expert.