Diamond Tradeable Instrument Security and Valuation
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Solution Overview
Problem
Diamonds, due to their individual uniqueness, lack fungibility and a standardized trading system, making them difficult to trade as commodities like precious metals.
Innovation Solution
A secure tamper-evident envelope containing a combination of non-uniform diamonds, with each diamond valued and recorded using a standardized method, including digital data storage for authentication, allows for the creation of tradeable instruments with comparable values, facilitating a trading system and market for these commodities.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If individually unique diamonds are used as tradeable instruments, then the individual value and uniqueness of each diamond is preserved, but the fungibility and ease of trading between different diamonds deteriorates
Solution Approach 1:
The patent combines multiple individual diamonds into a single tradeable instrument containing a portfolio of diamonds with substantially equal total value. This merging approach allows the instrument to function as a standardized commodity while preserving the individual uniqueness and value of each diamond within the portfolio, thereby achieving both reliability of individual value and ease of trading through fungibility.
Solution Approach 2:
The patent creates standardized tradeable instruments that replicate the value and characteristics of diamond portfolios through systematic selection and valuation methods. By using digital data stores to record and verify the attributes of diamonds within standardized instruments, the system enables interchangeable trading while maintaining the underlying individual value and uniqueness of each diamond.
2Ease of operation
If a standardized valuation method is applied to non-uniform diamonds, then the fungibility and comparability of tradeable instruments is improved, but the precision of individual diamond valuation deteriorates
Solution Approach 1:
The patent segments the valuation process into two distinct levels: individual diamond valuation using specialized gemological assessment for precision, and portfolio-level standardization using declared values and digital records for fungibility. This segmentation allows each level to optimize for its specific requirements without compromising the other.
Solution Approach 2:
The patent introduces digital data stores as intermediaries between the physical diamonds and the standardized valuation system. These data stores record the declared values and attributes of individual diamonds, enabling precise individual valuation while simultaneously providing the standardized information needed for fungible trading across different instruments.
3Ease of operation
If multiple diamonds are combined in a single envelope to create a standardized instrument, then the fungibility and tradeability are improved, but the complexity of selection and valuation processes increases
Solution Approach 1:
The patent performs preliminary selection and valuation of diamonds before they are combined into tradeable instruments. By pre-determining the declared values and attributes of individual diamonds and recording them in digital data stores, the system simplifies the subsequent combination process and enables standardized trading without increasing operational complexity.
Solution Approach 2:
The patent implements self-service mechanisms through automated digital data storage and verification systems that automatically track and validate the attributes of diamonds within instruments. This reduces the need for manual verification and simplifies the selection and valuation processes, thereby improving tradeability without proportionally increasing complexity.
Data Source
AI summary
A tradeable commodity or instrument, a trading system for a plurality of such commodities, a method of trading using such a system and security systems related thereto. The tradeable instrument comprises a secure container constituted by a transparent cover (12), a stone holder pad (14), a set of diamonds (15), a diamond or stone holder (16), a data card (18), a bottom cover (20) and a tamper evident band (22) interconnected into a secure, tamper-evident envelope. The data card (18) incorporates physical and digital security features. In addition, at least one externally readable programmable logic device is incorporated in the tradeable instrument card. The tamper evident band (22) is shrunk onto the tradeable instrument card and includes physical security features in the form of holographic foils incorporated in the band.