What attributes are used to determine a diamond’s price (intro to the DPA)

Here are the 14 parameters used by diamond dealers the world over, now forming the basis of the Carats.io Diamond Pricing Algorithm taking the world’s most exclusive commodity into the digital age.

Diamonds have always been a commodity in high-demand. However, the variety and complexity of such precious stones have made it incredibly difficult to develop any standardized price evaluation for them. Instead, only those who had accumulated years of experience in the industry – the diamond dealers themselves – could name the price for the stones, after looking them over with their own two eyes.

This lack of standardization remained a formidable obstacle, one that kept diamonds as being the only major commodity without a financial market. Anyone wanting to purchase a diamond found themselves dependent on the subjective whims of individual dealers, while having to re-appraise the gems at each stage of the trading process.

However, Carats.io has found a way to overcome this problem, utilizing the latest machine learning techniques. By doing so, they are laying the foundations for a financial market for diamonds, taking the world’s most exclusive commodity far from its primitive origins and into the digital age.

The developers at Carats.io realized that by pairing sophisticated data analysis methods together with a large database of tens of millions of diamond transactions, they could develop an evaluation model that could automatically assess the price of any diamond. Using data from some of the world’s largest diamond exchanges, they trained the Diamond Pricing Algorithm (DPA) – the world’s first standardized diamond pricing mechanism.

So what makes diamonds so difficult to price? We’ve listed here the 14 complex parameters included in the DPA.

1. Certificate – Grading certification from the Gemological Institute of America (GIA).
2. Carat – Weight measurement of the stone. (One carat is the equivalent of 0.2 grams.)
3. Color Grading – White diamonds are given high ratings for colorlessness, while colorful diamonds are rated based on intensity and purity.
4. Clarity – Imperfection grading. A high clarity or ‘flawless’ diamond won’t have blemishes or inclusions that disrupt the flow of light.
5. The Cut/Design Grading – The man-made aspect of a polished diamond is graded for its proportions and design finish.
6. Symmetry – grading subsection of a diamond’s cut, which refers to the alignment of its facets to one another and to its girdle.
7. Shape – Diamonds have both traditional and innovative styles, and the value of a diamond is influenced by its relation to conventional shapes.
8. Polish Grading – When cut, diamonds are polished smooth, to varying levels of quality. Over time, this smoothness can be further diminished by wear and transport.
9. Fluorescence – Certain high-quality diamonds may emit a soft glow under black light. This unique aspect can influence a diamond’s value.
10. Girdle – The outer edge of a diamond. The girdle can range from thin to thick, and the valuation effect of a girdle’s thickness exists in relation to the diamond’s overall shape.
11. Culet – A small facet on the bottom of the diamond that protects the stone from chipping. Modern diamonds tend towards smaller culets or having no culets at all.
12. Depth – Refers to the height of a diamond, along with the ratio of its height to diameter. Certain shapes vary in their desirable depth ratios.
13. Table – Refers to the width of the top area of a diamond, along with a ratio of the top area to the total diameter. Certain shapes differ in their desirable table ratios.
14. Country of Origin – Regional rarity and the history of a diamond’s country of origin can affect its pricing.

The significance of the DPA should not be underestimated. The algorithm presents an example of innovative technologies unlocking what had previously been the most exclusive market. Carats.io has taken an age-old commodity and – for the first time – opened it up for a standardized financial market accessible to investors and consumers around the globe.

To find out more about the how Carats.io is utilizing cutting-edge technologies to establish the first financial market for diamonds, join the Carats.io Telegram group .

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