Difficult Transfers
The Cut could solve increasing problems moving money between traders and retailers, one mid-size diamond dealer said.
"Transfers of money have become increasingly difficult. With banking regulation, even the smallest move becomes complicated. It can take days," said the dealer, who asked not to be identified because of the sensitivity of the process.
"Buyers don't want to give the money till they get the stone, and sellers don't want to give the stone till they get the money."
He wanted to see how it will be regulated, however, which may take some time, given that the coins are being launched without any government regulation in place, as is typical in the cryptocurrency world.
Bitcoin, the original cryptocurrency, has lost 70 percent of its value from its peak in December partly because of market concerns about a global regulatory clampdown. Many Bitcoin backers say regulation should be welcomed.
A spokeswoman for the Economy Ministry, which oversees the diamond trade, says there has been no in-depth discussion yet on how the coins would be regulated.
Presale of the Cut went live at the International Diamond Week that started on Monday. The coins should enter into use within a few weeks, said Avishai Shoushan, CEO of the year-old CARATS.IO, which created the coins for the exchange.
The coin is based on an index using 14 parameters, compared with just four characteristics used to price physical diamonds.
Price is determined by an algorithm, because whereas gold is priced by the ounce or oil by the barrel, for example, diamonds are priced individually since each diamond is so different from the next.