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Diamonds Are Forever, And Can Now Be Traded Online Too
by Robin Wauters on October 21, 2008

Who knew you could auction real diamonds much like you could sell your stamp collection on eBay?

Well, not really, but pretty close. DODAQ has launched a demo version of what appears to be the first ever online diamond exchange, enabling professional traders to buy, sell and hold certified polished diamonds like stocks. The company offers a two-way auction for traders and facilitates electronic transactions with real-time tradable pricing.

Now, it’s been a while since I’ve traded any diamonds, but according to company management the mechanism is bound to make waves in the industry. The way it works now, is that there’s no real fixed price for polished diamonds. The few inventory lists that give an idea of which stones are out there, are often inaccurate or incomplete. Buyers and sellers pretty much agree on pricing based on a scheme that’s distributed on a weekly basis, but without any real, dynamic transaction data that can be used for benchmarking.

DODAQ aims to provide a centralized, global meeting place that enables basically anyone to trade or invest in diamonds, with transparency on rates. The platform also allows outsiders to start investing in diamonds and set up a virtual holding. Obviously, the biggest challenge for the company is building a market place so secure that it’s able to convince industry professionals diamonds can effectively be traded online ‘like any other commodity nowadays’ (not my words). In order to brush off skepticism, the authenticity and actual existence of every stone is graded and guaranteed (including insurance), and the polished diamonds are locked in a vault facility together with their certification documents.

DODAQ acts as a custodian, so it charges a fee for the vault service and takes a commission of maximum 1,5% on any transaction. You can sign up for a demo account and play around with $500,000 on a dummy balance. I embedded a video below that outlines what DODAQ does in a nutshell.

 

Comments

this is interesting… really cool idea, but in order to work the power houses have to buy in….

I wonder if I can by a CDO on this badboy — collateralized deadpool obligation

jk, actually right now diamonds are priced per the rappaport report or some bs like that.

the only problem is that a lot of jewelers base the pricing that they can acquire a diamond for a customer off that report and the cost is known when the customer is there. If there is an auction, the price is up in the air for two days.

 
 

Can they be easily traded like stocks? Also who would verify the quality?

Yup, traded just like stocks, or more like gold actually (try the demo).

“All diamonds published on the DODAQ platform have first been graded by a recognised gemological grading laboratory and are received with their original certificates into the DODAQ vault.”

Riiiight.

Either the people behind this idea don’t really understand how diamonds are graded and traded in the real world, or they are hoping you don’t really understand how diamonds are graded and traded in the real world.

I’m betting the latter.

 
 
 

Haven’t you seen the blood diamonds movie dude? …diamonds suck

en.wikipedia.org/wiki/Blood_diamonds

 

its unlikely anyone’s going to overthrow debeers, but they can try
rankmaniac

 
 

As developers of the promo, I can tell you this is an incredible application. I’ve seen it in clear cut action, so to speak and it’s going to cut a swathe through the diamond trade.

Congrats to Simon & team at Dodaq.

 

Next: put/call options on diamonds )

 

I hope the guys at DODAQ have bullet-proof cars and 24/7 secuirty escorts for their families. The cartel does not like upstarts like this.

 

At first I was apprehensive that such a thing could even be done but on closer inspection, having used the site, this looks like it could really change things – ultimately for the better. Fascinating stuff. I look forward to reading more.

 

This will certainly be interesting. The diamond world isn’t used to startups of any kind. Not in the least, something like this.

As a financial instrument, why not trade diamonds like any other commodity? But, if you are choosing just ONE diamond for your fiancee, I highly recommend seeing a stone in person. Any gemologist will tell you that no two stones are ever the same, and that each has its own “fingerprint” and will handle light refraction differently. There are 57 angles to a diamond, and each stone is cut slightly differently, according to the natural growth of its crystals.

Two stones of the same 4 C’s can produce very different effects of light and sparkle. This is a subtlety that is often times lost when people compare diamonds, site unseen, and assume the 4 C’s tell the whole story. But when you put the two stones next to each other, you might be surprised at how obvious of a difference there could be.

It’s very helpful to categorize diamonds with the 4 C’s, but as you can imagine, a 10 minute crash course in the 4 C’s can’t replace a lifetime of experience in diamonds. It’s the same in any industry, where reading a wikipedia article on something doesn’t make you a real expert. You’ll have solid footing, though, and that’s a good start.

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