The issue has two main aspects. Firstly, as the luxury market has been growing tremendously and its reach has globalized, it has been met with the pendant of its success : the rise of counterfeiting. This is a major concern for all luxury brands, as counterfeiting can damage a brand’s perception and overall desirability. The second aspect is part of a wider ESG approach where companies are more and more expected to be transparent about their material sourcing. These growing concerns and constraints call for actions where technologies like blockchain can possibly help.

Undoubtedly, traceability is now a central concept in all business approaches and is increasingly encompassed in legal frameworks regimenting all aspects of the trade, including for watchmaking and jewelry. Whether it is pertaining to sourcing of colored stones, diamonds, gold or identifying finished goods as watches or jewelry pieces, traceability and warranties of authenticity are here to stay. The expansion of blockchain technology offers new ways to guarantee the products’ integrity and fight the ever-growing concerns of counterfeiting and fraudulent origins. We take a look at a wide array of applications and evolutions seen in recent years.

Among the materials that require more and more traceability, diamonds come to mind firsthand. It started with the definition of the Kimberley process in 2005 which  led to the creation of the Responsible Jewellery Council. It was aimed at excluding « conflict zones » diamonds from the trade. Certifications followed, like the Code of Conduct of the Responsible Jewellery Council - created with the Kimberley Process -, that are still used today in the industry. But this does not guarantee the diamonds’ origin, nor their authenticity as laboratory diamonds are also emerging in the market. 

De Beers, the largest diamond producer in the world, started delving into the issue around the same time, in 2003. Feriel Zerouki, Senior Vice President of Corporate Affairs at De Beers, explains: « The initial catalyst for our work in this area was that we were seeing more consumer interest in provenance and our work has since accelerated as the evolving sanctions landscape for Russian diamonds made provenance assurance more pressing. We first developed our Best Practice Principles assurance programme (an ethical code of conduct for all De Beers companies and all our Sightholder customers) and then we launched our Forevermark diamond brand for which we use an independently audited proprietary ‘pipeline integrity’ programme. However, it was in 2017 that we recognised the potential of emerging blockchain technology to support provenance assurance and this is when we started working on what would become Tracr™ ». 

Since 2022, the Tracr™ platform is now at scale and can provide a tamper-proof traceability insurance for all Sightholders (selected buyers authorized to partake in the selling of De Beers’ diamonds, editor’s note).

One of the pioneers in the field of traceability is a Swiss family-owned company dating back to 1854, the House of Gübelin. No blockchain at that time, but a strong will to guarantee the provenance and authenticity of colored stones on their jewelry since they started creating them.

Indeed, with the development of the industry, the first synthetic colored stones started appearing. That triggered their decision to create their Gem lab in the early 1920s to deliver authenticity certificates with their jewelry pieces. It stemmed from an ethic and a strong vision. Eduard Josef Gübelin was a dedicated gemologist who unveiled that stones from the same mines showed similar complex patterns within them. 

This was the start of the Gübelin authentication process. It has been perfected ever since. In 2017, they launched their Provenance Proof and their synthetic physical tracers that are applied to colored stones at the mine level. They started using the blockchain technology to secure the data collected in 2019. This unforgeable certificate will accompany the stones from the mine to the final set piece and during its whole life afterwards, recording ownership changes, repairs…etc.

This technology is open for everyone to use. As Patrick Pfannkuche, Head of communication for the brand explains : « The philosophy of Provenance Proof is to be inclusive and cooperative to enable more transparency and traceability for the entire industry. Our platform is therefore open to all stakeholders who wish to document their commitment to greater transparency. We welcome all organisations to use our platform and apply our technologies. Meanwhile, there are more than 700 companies, which currently use and trust in the Provenance Proof Blockchain ». 

Sharing best practices is key for achieving industry-wide transparency. Likewise, this applies to one of luxury’s main material: gold.

As luxury consumes about 50% of all produced gold yearly, traceability of this material is of utmost importance. For a long time, the origin of the precious metal was not looked upon. With rising awareness of human rights and conflict related issues, transparency on its origins and production methods has become an unavoidable element. Many processes have been created to facilitate identification of gold’s origin and certification of its compliance to international rules. Large foundries are in the front line of these developments. 

Metalor, the Swiss company, one of the largest precious metal founder in the world, has been addressing this issue for a long time. Dealing with high value material, the company is used to stringent due diligences, loads of validation documents analysis and transport security. Blockchain technology has increased further the security level at each step of the process. But they have not stopped there. 

Notwithstanding the 45 certifications that Metalor has achieved, which all enforce the traceability of the sources, their main concern remains, as Nicolas Carrera, Group Treasurer, puts it: « to be 100% sure that the gold we import comes from where it is supposed to, without depending solely on the information provided to us. We want to be able to independently identify our sources ». This is why Metalor has developed its own technology: the Geoforensic passport. « It is a true scientific validation of the provenance of gold. It determines a precise DNA identification of the mine the gold comes from ».

This is supposed to eliminate any « grey » sources, extracted in conflict zones or identified gold mines known for their harsh work conditions or unequivocal links to money laundering, like the Rinconanda mine in Peru, for example. « 100% of our mined gold lots are analyzed upon arrival and compared with our known Geoforensic signatures. If there is any discrepancies, the lots are rejected or more information is demanded », explains the group treasurer.

What does that entail? Does it really help for traceability? Let us look into what Origyn has to offer. 

Launched in 2019 with a great promise of creating a new Blockchain protocol which will enable to generate authenticity certificates for all products, in particular watches, jewelry, diamonds and gold (coins, bars…etc.), Origyn is a non-profit Swiss foundation. Its original idea is to associate decentralized Blockchain solutions with artificial intelligence and machine learning. On paper, it would be the ultimate tool against counterfeiting, which is plaguing the luxury industry. More than 40 million fake Swiss watches are evaluated to be sold each year…compared with the 16.9 million actually exported (source, Federation of the Swiss Watch Industry FH, 2024).

This shows how important such a tool would be for all brands concerned about their image risk and potential loss of sales. Victor Gailly, operational manager at Origyn explains: « Once fully accomplished, the Origyn technology will provide a digital certificate that authentifies any luxury product in an instant, with a simple photo taken with your smartphone. It would be the end game for counterfeiting ». And a great leap forward for authentication and traceability! Unfortunately, it is not completely there yet. Victor Gailly develops: « The first phase of the technology which enables the traceability and the secularization of the data is efficient. We already have achieved the most difficult part being able to store over 3.5GB of data for each product, whether videos, pdf documents, scheme plans, scans, pictures…etc . The biometric identification and authentication is getting close. It will be a game-changer. We hope that within the next 1 to 2 years we will be able to have the artificial intelligence analyze in an instant over 1 billion lines of information on a product.».

But for now, the blockchain still just records data from the documents delivered by the owner…so indeed, an authentication generated through the physical characteristics of a product and its ultra-high definition images would be a huge improvement. At this point, the Origyn blockchain technology is being experimented with big companies in the gold industry, such as Metalor, for example, where you can find QR codes on their gold bars to identify them unmistakably. Now customers can actually buy physical gold through the NFTs they have created for each of their bars, for example. It makes ownership and trade a lot simpler and safer. Moreover, it can record their Geoforensic passport as well on these NFTs.

So we see the technology is not yet the perfect solution towards traceability. Nonetheless, it is used more and more, as the multiplication of watch certificates clearly shows.

As shown in the above examples, the technology is still confronted to limitations that no certifications can remedy as of today. Indeed, recent occurrences have unfortunately unveiled these limits, whether products or materials are secured by the blockchain or not.

Rumors of lab-grown diamonds being mixed with natural ones, especially at the melee level, still surface periodically, notwithstanding the controls and certifications enabled by the blockchain technology. Alrosa, the Russian state company, the world’s largest diamond producer, whose diamonds are under severe embargo since the start of the Ukraine war (with the latest set of restrictive measures adopted by the EU and the G7 in January 2024), is still able to reach the market through loop holes of the trade going through less principled platforms. But, overall, the will for a more transparent world, more traceable sourcing and better authenticated products is getting stronger.

In that sense, blockchain offers a great re-assurance and traceability tool. Its decentralized and tamper-proof components enable to build trust around it and all the products it relates to. But the authenticity of this information still requires thorough due diligence upstream of any certification. Otherwise it might just « secure » inaccurate data. 

The potential is soon there to include physical information that will ensure the unmistakable authenticity of a product. And it could go a lot further by integrating all sustainability and human rights respect data available onto the blockchain certificates as well. This would indeed be a true revolution. 

Until then, trust and technology do not exclude thorough physical controls.