There are certain issues that are presently hindering the classification of diamonds as an asset, notwithstanding the various calls for diamonds as part of a favorable alternative investment. When compared with other commodities like gold, it is quite hard to realize a uniform price for diamonds because they are not fungible. What this means is that a particular carat of diamond isn’t equivalent to another carat because of the innumerable combination of characteristics of the diamond.
Additionally, the diamond market lacks liquidity. As much as a person can purchase a diamond, it becomes a challenge in reselling it at a reasonable market price. Because the exchanges of diamond are done on a business-to-business basis, this makes them irrelevant for investors coupled with the unavailability of a platform for reselling them.
To ensure that these gaps are bridged, CEDEX has come to the rescue through a tokenization process that will transform diamonds into a fungible asset with well-defined values. This platform by CEDEX is set to revolutionize the diamond market by providing transparency to make diamond a viable asset.
What is the Technology behind CEDEX?
A machine-learning algorithm known as DEX, is specifically designed to bring coherency and transparency to the diamond financial market. The machine comprises of three key components
- A global inventory analysis
- Diamond market financial indices
- Gemological composition of individually listed diamonds on CEDEX
The DEX is designed in a way that it would incorporate artificial neural network technology, making use of all available diamond data. The interesting thing about all this is that it open and transparent for investing or trading diamonds over the platform. The beta version of the DEX is currently being developed, which will provide a theoretical price for each diamond and rate it through its relative market value instantly.
There are basically three obstacles preventing diamonds from being considered as an asset class and these include:
- Lack of Transparency: There is no data available online to ascertain the real value of diamond in the market.
- Standardization: This is the ability to trade one diamond against another as each diamond is unique. This brings the question as to how do we create a homogenous product?
- The lack of Liquidity: This is a situation where buying is not a problem, but reselling is.
So, what is the solution to these obstacles?
In dealing with these obstacles, CEDEX considers two major technologies. The first is the blockchain technology while the second is the DEX Technology. The DEX Technology as already noted considers three major categories
- The Gem composition or the Gemological composition of the stone
- Parallel traits – these are traits done in the market
- Market indices – These are market trends, which are compiled together, and the outcome produces a market value.
It is important to note that this is the first time in history that there will be an objective real-time machine with the capability of generating a complete transparent market and provide diamond holders and investors the opportunity of holding a real market value.
Through the DEX technology, the two major obstacles are solved, which is the transparency and standardization issues.
How does DEX provide transparency and standardization?
For instance, two different people are trying to trade a one-carat diamond and both parties are asking for $100. Can you determine, which one is a better deal considering the fact that the gem composite of the diamond cannot be evaluated?
Because of this, the real value of the one-carat diamond cannot be determined. DEX takes each diamond, analyses it and based on the algorithm of the machine, it can provide a benchmark rating. The DEX will now assign the value of the diamond in line with the current market price. The DEX rates the asking price of the diamond over the market price.
In the area of liquidity, the DEX uses a two-sided approach by enhancing both the supply and demand aspects. The supply aspect comprises of the diamond dealers and the private diamond holders while the demand aspect has the general investors and the cryptocurrency investors. You can use CEDEX coin to buy a diamond. This new opportunity enables cryptocurrency investors to realize their profits as a real asset.
How does the CEDEX Platform Work?
You can watch the full video of the uniqueness of the CEDEX platform here. CEDEX uses a simple process, which begins with you going to their website. You upload the Gemological Institute of America (GIA) certificate and the system retrieves all the data. With this data, you can select the tokenization option available for the diamond to be sold. This option includes a single diamond, shared investment or diamond Basket (ETF). You can sell to a particular investor or in the area of shared investment, you have the option of selling your diamond to more than two people. In this case, the system will create a partial contract of the number of people involved with partial ownership of the diamond.
After selecting the tokenization option, the next option is deciding how you want the diamond distributed. You can decide to use the peer-to-peer method or the CEDEX exchange. The peer-to-peer method affords you the opportunity of putting the diamond in your wallet and selling it directly.
For the CEDEX exchange, the Custodian verifies the diamond matching it with the GIA certificate uploaded. If the diamond matches the GIA certificate, the Custodian takes the diamond and stores it. The system automatically uploads the smart contract. This contract is a representation of the diamond kept in the safe by the Custodian.
The diamond stays in the safe as long as transactions are being carried on. The diamond ceases to be in the safe the moment the investor(s) decides to hit the “deliver” button. After this, the diamond is delivered to your home or office and the token removed from the system.
CEDEX gives you the opportunity of investing in diamond without being an expert. The token presale is set to take place on Friday, January 12, 2018, at 1900 GMT. To participate, register on the CEDEX token pre-sale website.
CEDEX is a global exchange with the aim of closing the gap between the innovative financial markets and the traditional diamond industry. It aims at providing a groundbreaking change that will enable people to liquidate and invest in diamonds like other financial assets through a secure and transparent process.
The platform will give people the access to invest in diamonds, shares in a basket of diamonds (ETF), or shares of a high-value stone. Sellers, buyers, and investors will have full confidence because of the transparency in the value of diamond — facilitated by DEX, a blockchain technology and machine-learning algorithm that will provide the rates of a diamond asking price. It is the goal of CEDEX to create an exceptional benchmark value, contract, and rate for every stone. The CEDEX token pre-sale is set to take place on Friday, January 12, 2018, at 1900 GMT