Is Blockchain the New Ethical Gold Rush? Maybe

Is Blockchain the New Ethical Gold Rush? Maybe

Is Blockchain the New Ethical Gold Rush? Maybe

Advocates say tracing gold from mine to jewelry customer could help guarantee provenance, improve the lives of miners and reduce carbon emissions.

Blockchain – Generations Y and Z, soon to be the world’s most numerous consumers, are concerned about responsibly sourced and sustainable products. But when it comes to purchasing a gold chain or new hoop earrings, how often do they really know what they are buying?

The gold industry’s solution: blockchain.

Established as the driving technology behind cryptocurrencies, in an effort to solve that sector’s traceability shortcomings, blockchain is being considered by luxury jewelry powerhouses and the mining industry alike to guarantee the ethical provenance of gold mined in small operations, what the industry calls artisanal gold.

The regulatory oversight of these smaller operations, which produce 25 percent of the world’s gold supply, is usually spotty or nonexistent, and working conditions often are dangerous. So, the thinking goes, if larger companies and jewelry businesses require such operations to record information on a shared database, which in the blockchain can be viewed but not edited, they then can decide whether to buy output. And such economic pressure could force improvements.

Even though blockchain relies on trust — it is only as good as the quality of the information going in — the system also would paint a digital picture for consumers. It would tell them not only where the gold was mined, but also who did the work, what their working conditions were and how much they were paid.

The integration of blockchain technology into the jewelry industry is an increasing trend, said Jorgen Sandstrom, head of the World Economic Forum’s mining and metals industry group.

In October, seven leading mining companies, including the diamond behemoth De Beers, which operates sites from the Arctic to South Africa, joined the World Economic Forum’s Mining and Metals Blockchain Initiative. The companies promised to explore the creation of a blockchain platform to store information like the tracing of materials and the reporting of carbon emissions, but no timetable has been developed.

And, while all seven companies are large operations, the initiative intends to expand to small operations.

“In terms of increasing transparency, blockchain has the potential to have and act as one shared single source of truth,” said Nadia Hewett, who leads the forum’s projects on blockchain and distributed ledger technology.

At the Source
Gold is not as glamorous as the glittering connotations its name evokes. Globally, 1,600 tons of gold are mined for jewelry every year, some illegally, and pass through a succession of middlemen: miners, traders, refiners and jewelers.

Within this production ecosystem is a labor force of an estimated 16 million people in at least 70 countries, predominantly throughout the Southern Hemisphere, who dig out gold for small operations. Even though those mines fuel local economies, this segment of the gold mining industry has long been shrouded in secrecy and in recent years has come under scrutiny for being rife with human rights violations and environmental concerns.

And its impacts are far-reaching: It is known to be the world’s largest single source of mercury pollution. In Indonesia alone, thousands of children have developed birth defects, half a million people have been poisoned, and food and water supplies are laced with toxic chemicals.

For many, work at these small mines or in the initial production and distribution channels provides a ticket out of poverty. But even with global gold reserves said to be down about 26 percent in recent years as a result of exploration cutbacks, the jewelry industry’s unwillingness to be associated with the fruits of child labor, human trafficking and gold derived from areas of armed conflict has limited the growth of artisanal gold as a basic material for its products.

This article originally appeared on nytimes.com To read the full article and see the images, click here.

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