The integration of blockchain technology and precious metals has opened up a wealth of opportunities to create secure, verifiable investments backed by physical assets. For example, with blockchain technology, investors can purchase real-world shares in gold, silver, platinum, and palladium without intermediaries or complicated paperwork. This combination of digital security and tangible assets allows investors to protect and grow their wealth.
How the blockchain is transforming the precious metal industry
Although blockchain holds significant promise in the precious metal industry, many people approach it with trepidation. Many companies remain skeptical of the nascent technology and thus take a more cautious route in its implementation. But the fact is that blockchain could be game-changing for the industry, bringing about unprecedented levels of authenticity and verifiability to the data and supply chain management processes.
Blockchain technology can ensure the traceability of materials and guarantee an ethical acquisition process. Putting informed data regarding the locations and origins of these materials at our fingertips can help us do business better and take a positive step toward sustainable development in this sector.
The provenance of precious metals
Thanks to the idea of corporate social responsibility, the verifiability of materials used in the production process is becoming increasingly important. Consumers expect companies to take action to ensure that their supply chains are ethical and transparent and do not fund conflict.
Even giants such as Apple have made significant efforts to implement these measures. However, to complete the actual progress and build trust with consumers, a database must be established to accurately track the materials’ source from start to finish.
Blockchain technology has emerged as a revolutionary solution; its decentralized yet secure database ensures that all stored information is transparent and reliable, giving customers and suppliers peace of mind regarding materials sources.
Companies that can declare their provenance may soon find themselves one step ahead of those who do not; doing your bit for sustainability is certainly on-trend!
Supply chain management
Aside from tracking origin, blockchain technology can improve efficiency and drive down costs for the precious metal industry. Blockchain-backed platforms could provide crucial insight into operations and performance metrics, allowing stakeholders to become increasingly data-driven in decision-making.
Every stakeholder involved in a transaction – customers, suppliers, and other third parties – has access to real-time, verifiable data. In addition, the blockchain creates a transparent record used as a reference point. As blockchain technology develops and evolves, it becomes more suitable for disaster recovery as companies move away from traditional paper systems towards foolproof digital solutions.
The authenticity of precious minerals
Stakeholders can also use the blockchain to assure the authenticity of precious metals. Thanks to its decentralized data structure, the blockchain can provide an immutable record of each transaction made regarding a particular commodity; this means that any attempts at fraud or counterfeiting can be immediately detected and thwarted.
The authenticity of precious metals is essential when dealing with precious metals like gold, silver, and platinum, where there is often a risk of ‘grey market’ activities and fraudulent trading. As such, blockchain technology promises to make verifying precious metal authenticity safer and more reliable.
Precious metals data security and transparency
Mining data can be highly vulnerable if not appropriately managed. With increasing cyber threats, companies need to take full advantage of a secure system that is available with blockchain technology. Blockchain not only provides organizations with complete transparency when it comes to their data but also allows them to control who accesses and acts upon their information.
Blockchain creates a secure environment for companies to work and manage the approvals of documents in their exploration and mine design processes. In addition, transmitting the expected specifications agreement, payment, and settlement is easier by eliminating manual interventions. Consequently, businesses no longer worry about potential fraud or identity theft since all activities are in an immutable digital ledger.
How blockchain authenticity and verifiability of precious metals work
Companies have increasingly implemented blockchain solutions to ensure the authenticity and verifiability of precious metals.
These solutions use smart tags, which can be affixed onto a good and be used to track its location and assign relevant data at every step of its journey in the supply chain.
Three primary types of smart tags are: QR codes, RFID tags, and signatures etched onto the precious metal using laser machines. These tags provide comprehensive tracking solutions and the product’s production process, such as origin, manufacture date, place, and composition.
Once a user associates a tag with the blockchain, it shares its immutable time-stamped data on the blockchain for each newly formed transaction.
Posting data on the blockchain offers transparency and assurance that products will remain secure from counterfeiting efforts. For example, while it might be easy to counterfeit a smart tag in the first place, scanning a counterfeit tag will help customers identify it as fake since you can trace the history of the genuine precious metal on the blockchain.
Blockchain real-world use cases in the precious metal industry
Minehub
MineHub is revolutionizing the mining and metals industry with its open, enterprise-grade platform for digital trade. The new technology eliminates outdated paper-based systems’ costly and time-consuming manual processes of outdated paper-based systems to provide greater efficiency and security.
In collaboration with Minehub, IBM developed the company’s supply chain solution.
This cutting-edge technology reduces costs and brings visibility, security, and efficiency to financiers of commodity transactions through their network applications. In addition, it digitally streamlines administration and communication between lenders and financiers so businesses can quickly and securely make critical transactions. MineHub is truly transforming an industry that has relied on paper-based processes for too long.
Tesla
Tesla has not only achieved success in the electric vehicle (EV) industry by selling regulatory credits, but they have also taken a leadership role in ensuring ethical and sustainable practices within its supply chain. To this effort, they have collaborated with cobalt producers to develop a blockchain-based platform to track the location of the cobalt from its origin at the mine to the EV battery, alongside China Molybdenum Co., Eurasian Resources, and Glencore.
This initiative goes beyond Tesla’s operations and will help promote transparency throughout the process for other EV manufacturers seeking cobalt for production.
Tesla is committed to raising industry standards and demonstrates that combining its practices with other companies’ attempts to end unethical labor practices associated with mining cobalt can achieve positive environmental changes.
Everledger
As globally complex challenges arise in the mining and consumption of critical minerals, Everledger offers an excellent solution combining blockchain technology with regulatory compliance. This approach presents an opportunity for businesses to gain a competitive advantage in the market, understanding and auditing their supply chain from mining to downstream processing, circular manufacturing, and end-of-life material uses.
With increased transparency provided by traders, transactions that would have taken days can now complete overnight. By allowing users to verify, pressurize or identify opportunities for efficiency within the sector through its pioneering technology, Everledger has opened up unimaginable possibilities for market players all around the world.
Teck
Blockchain technology has a wide range of potential applications across multiple industries, and Teck – one of Canada’s largest mining companies – is no exception.
With operations in Canada, the U.S., Chile, and Peru, Teck has identified blockchain as a helpful technology for making their supply chains more transparent and socially responsible.
In partnership with DLT Labs, Teck uses blockchain to trace their mineral germanium from source to customer through its entire supply chain. The data recorded includes information on greenhouse gas emissions, environmental standards, and social governance practices providing insight into the sustainability of the whole process. In addition, their use of blockchain shows innovation within the industry and its commitment to sustainable practices.
Bullion dealers
Bullion dealers are also exploring blockchain technology to improve the efficiency of their operations. By leveraging smart contracts and distributed ledger technology, these firms can securely track precious metals from source to customer while reducing the risk of fraud and counterfeit goods.
The London Bullion Market Association and the World Gold Council are taking a huge step forward to instill confidence in buyers that the purchased gold is not coming from questionable locations.
By developing a digital system to track gold through the supply chain, utilizing a blockchain-backed ledger, the Gold Bar Integrity Programme casts more light on an industry with a problematic history. The program will trace transactions from mining roots up to their final destination in bank vaults and plan on targeting gold obtained by illegal means or created under violent circumstances. Several banks are collaborating in this endeavor, including Standard Chartered Plc., creating yet another reason for trust amongst those engaging in transactions concerning the illustrious metal.
STAMP Stream
STAMP Stream is a blockchain-powered platform that helps companies track and trace minerals from source to customer while promoting ethical and sustainable practices. The system uses RFID (radio frequency identification) technology to scan and store data about the origin of each mineral in its secure decentralized database.
This innovative platform allows customers to check where their mineral comes from and whether it meets specific ethical standards, such as those outlined in the United Nations Conflict-Free Sourcing Initiative.
Conclusion
Thanks to blockchain, the entire supply chain process is becoming more transparent and efficient. By allowing users to verify, pressurize or identify opportunities for efficiency within the sector through its pioneering technology, Everledger, Teck, Gold Bar Integrity Programme, and STAMP Stream have opened up unimaginable possibilities for market players.
With increased transparency provided by traders, transactions that would have taken days can now complete overnight. As such, these companies are paving a new era in an industry shrouded in secrecy and suspicion.
Companies in other industries should take note of this transformation, as it is only a matter of time before similar solutions become the industry standard. Blockchain could pave the way for a more transparent world with greater ethical oversight, making it more difficult for bad actors to take advantage of the system. Blockchain technology offers numerous benefits to the supply chain industry and sets to change how we conduct business in the future.
