I’ve joked with some of my geologist friends that they should change the name of their gold, copper, etc. deposits from “Elk” or “Santa Rosa” or some such to “Bitcoin.” Then they could put out a press release saying they plan to mine Bitcoin, and their company’s stock would double.
Don’t get me wrong. I’m a huge fan of distributed ledger technology. I think it will eventually revolutionize many industries. Distributed trust networks could be, among other things, the end of Wall Street as we know it. Or at least the end of salespeople peddling obscure and risky products, pretending to do “God’s work.” For that, I wouldn’t shed a tear.
But using blockchain tech to solve problems in the natural resource sector is no simple matter.
Let’s take the example of natural diamonds. Yes, these can be laser-engraved with unique, tiny serial numbers. Combine that with a blockchain ledger entry, and the stone’s ownership history and status should become, well, etched in stone. Great. But a clever counterfeiter could engrave an artificial stone with the same number, and most people wouldn’t be able to tell the difference. They’d still have to go to a professional to get their stone verified.
Or consider the so-called conflict mineral problem. Blockchain seems like a good way to verify chain of custody from mine to end user. Great. But an unscrupulous miner could still take some high-grade feed from “conflict” sources and mix it in with his mine output to boost profits. Even if you send troops to secure the perimeter of the mine, you’d still have the problem of soldiers possibly taking bribes.
In other words, we can’t expect criminals to play fair. A chain of trust is only as good as its weakest link—and that’s going to be the people involved, not the technology.
I’m not saying we shouldn’t try. Any new technology that improves trust in any industry has to be a good thing. I’m just saying it won’t be easy. It will take time to get right.
And the addition of the word “blockchain” to a mining or mineral exploration company’s name is no reason to buy the stock.
Wednesday, April 18, 1:05am, EDT, 2018