Everledger and the immutable protection of provenance through the block chain

By Rick Huckstep

It was only a quarter of a century ago that Tim Berners-Lee gave us the WorldWideWeb and changed the world forever. It is hard for the millennial generation to contemplate a world without the Internet, social media and an always-on culture. And how on earth could anyone buy or sell goods and services without an online store, let alone businesses trade or simply do the things they need to do.

But before the 1990’s, we wrote letters (email), we sent postcards (twitter), we made photo albums (Facebook). When we wanted to buy something, we wrote a cheque or swiped our credit card through a clunky imprinter device, aka “knuckle buster”, to leave the seller with “proof” that we’d paid using our card.

It is just as hard to believe how the world has changed in such a relatively short period of time as it is to appreciate that in the beginning, not even Berners-Lee could have predicted the impact of his creation.

Which would explain the growing excitement about block chain and the massive potential this emerging technology offers.

As the underlying technology that supports Bitcoin and the other 740 or so cryptocurrencies, block chain is “a distributed data store that maintains a continuously growing list of data records that are hardened against tampering and revision, even by operators of the data store’s nodes.”

The block chain can be used to store information on a decentralized ledger, i.e., not owned or controlled by any one institution or body, and it has four primary characteristics that define it for this purpose.

First, it’s immutable, which means that the records placed on the block chain cannot be changed. Second, it’s secure, which means it can be trusted. Third, it’s fast because it’s automated and digital. And fourth, it’s scalable with no limit to how many records can be stored on it.

The banking industry has been quick to see the potential for massive and wholesale disruption to the global infrastructure. Last week, the Independent reported a quote in BNP Paribas’s magazine that block chain “should be considered as an invention like the steam or combustion engine.”

What about Block chain for the Insurance industry?

I recently Skype’d with Leanne Kemp at her home in Brisbane to learn about her journey as a pioneer in this space. Leanne is CEO of Everledger and a serial entrepreneur with a strong interest in emerging tech. Ten years ago, she invested in a jewelry business and struggled with the traditional bricks and mortar approach to luxury goods and insurance, especially when it comes to diamonds.beautiful_diamond2

The diamond and jewelry market offers a lot of opportunity for fraudsters, thieves and unlawful activity which costs the insurance industry around $50 billion a year. And the problem all comes down to provenance, which is the “chronology or ownership, custody or location” of an object.

For the insurance companies and the law enforcement agencies alike, there is not a central, trusted database to turn to. The traditional approach for insurance firms is to focus on the policyholder, more then the object being insured, when assessing risk. Unlike high volume objects, such as cars that are all registered on central databases, the provenance of diamonds and high end jewelry is all paper based.

And over time, buried in all this paper, provenance gets lost. When reviewing a claim, it is near impossible for an insurer to accurately assess both the quantum and the peril (how many times have I seen this diamond and how come it keeps being stolen?)

Leanne saw that this massive industry problem could be solved with innovative technology. So, with nothing but her backpack, Leanne left Australia and headed to London, the epicenter of the insurance market and a hive of activity for Fintech and technology innovation.

In November last year, Leanne took part in the Aviva hackathon and 48 hours later, Leanne and her team gave the winning pitch to clinch the Aviva Insurance Innovation Award. This led to an approach by Techstars to stay in London and join their accelerator program where she formed her team. Gaurav Rana is an expert in block chain technology and Marc-Antoine Trehin is an expert in data focused on delivering a working platform for industry.

This is how Everledger came into being ! And earlier this month, Leanne presented Everledger at the Barclays Accelerator demo day. You can watch the pitch here.

How it works

Everledger is a digital global ledger that tracks and protects items of value. With the introduction of the ‘op_return’ functionality into block chain, the ability to bind or add data into the block chain ledger was enabled for the purpose of being able to add contract or asset data to a transaction. Everledger are using this functionality and the 40 bytes of arbitrary data that is available to bind transaction data as part of the hash, thereby securing the information into the ledger and making it immutable.

This immediately addresses one of the major issues of document tampering. With Everledger, the record is tamper-free…it is immutable and can therefore be trusted!

Everledger have established relationships with the major certificate houses in the US, Israel, India, and Antwerp. These houses grade and certify each diamond for the market. Everledger take this data and create a digital “DNA” record comprising the 4 “C’s”, 14 meta data reference points and the unique identification code for each stone.

With this information, Everledger knows who owns what diamond and where it is. They can even trace the movement of diamonds on platforms like eBay and Amazon as they are bought and sold. Everledger work with insurance companies when diamonds are reported stolen, and alongside Interpol and Europol where diamonds are crossing borders and entering black markets.

Everledger has recently constructed a consumer app that enables users to add their own diamonds and any other valuable items to the Everledger block chain.

Everledger also provides a Smart Contracts platform to facilitate the transfer of ownership of diamonds to assist insurers in the recovery of items reported as lost and/or stolen. Smart Contracts will also enable a fundamental change in the diamond marketplace and the way they are financed.

The acceleration of Everledger in around 4 months from a fledgling idea to a production platform is astounding. Everledger already have over 300,000 diamonds registered and when you go to their website, you can see the workflow in action, real-time, as batches of 1,000 diamonds at a time are embedded in the block chain.

Barclays have played a large part in this acceleration of Everledger from concept to production. Barclays, as a partner at Techstars, are not usually associated with the insurance industry although they do have an insurance business in South Africa with ABSA. As part of the Techstars program, they facilitated Leanne going to South Africa, the heart of the diamond mining industry, and work with the ABSA to support the build of Everledger.

There is no doubt in my mind that the block chain technology will, one day, become ubiquitous in insurance as it will across all of financial services. And whilst the use case for Everledger is the provenance of diamonds, the technology that Leanne and the team have built can be applied to many other asset classes in the exactly the same way. Extending Everledger beyond diamonds is an important milestone for the company and she hopes to achieve this before the end of this year. A bold and brave target but surely with the evidence of her already impressive build, this will be a ‘one to watch’.

Twenty-five years ago, nobody really saw the extent to which the WorldWideWeb would change our lives. I wonder how long it will be before we are looking back to this decade and the saying the same about the origins of the block chain?

11 thoughts on “Everledger and the immutable protection of provenance through the block chain

  1. Leanne Kemp is not what she pretends to be. She is a lyer and a fraud, but Techstars backed her anyway fully knowing how bad she really is.


  2. talk about a sharp mind with a great execution strategy. Without question a space and person to watch. Industry support seems to me to be the key to execution ! Well done Leanne ! Well done !


  3. I am working on an insurance startup and its fascinating to see the use of blockchain (smart contracts) to combat fraud and theft of valuable items.

    I should say, this is not new per se considering that paper money and most items have unique serial numbers, and these can be tracked to reduce fraud / theft.

    I guess the real issue the insurance industry had was a centralised (secure, accurate) accessible database containing valuable items and their serial numbers.

    The idea should work but there is also an assumption that once you steal a valuable item you go on to sell it on a public marketplace like (ebay) etc

    Most famous paintings that have been stolen have never been recovered, why? probably sold underground or used for ransom or whatever.

    Expensive jewelry is stolen everytime and never recovered, why? probably melted back to its base form and sold on that basis.

    These are just 2 examples to show how the system can still be circumvented.

    I think the idea of smart contracts is very powerful and useful in the insurance industry and is something I would explore for my startup as a thing to do later.

    Liked by 1 person

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