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The gold industry sees blockchain as a salvation for the bullion black market

Lionel Healing—AFP via Getty Images

Long considered the epitome of a sleepy asset, gold is turning to an emerging technology—the blockchain—to protect against illicit bullion bars circulating.

The London Bullion Market Association and the World Gold Council have started a pilot project that will use blockchain technology to track the entire transaction history of gold bars. The digital ledger created for the “Gold Bar Integrity Programme” will record a gold bar’s place of origin and its chain of custody, including the names of its miners, transporters, exporters, processors, and manufacturers.

“This will effectively digitise the global supply chain of gold bars,” the project’s participants said in a statement on Monday

Although the technology used will likely be similar to what’s used for tracking cryptocurrency transactions, there will be some small differences. Not every gold transaction will be accessible to the public  like it is with Bitcoin, but it will let participants at different stages of the supply chain access the blockchain if given permission, according to Bloomberg.

Digitizing the transaction history for gold bars will help prevent gold bars mined by criminal gangs or in conflict zones from ending up in bank vaults, according to Bloomberg. In some cases, gold bars from illicit sources are stamped with false logos, according to Bloomberg, and have made into bank vaults.

Last week the U.S. Treasury Department imposed sanctions on Belgian businessman Alain Goetz and companies tied to him for allegedly receiving gold that the government says has contributed to armed conflict in the Democratic Republic of the Congo.

"Conflict gold provides the largest source of revenue to armed groups in eastern DRC where they control mines and exploit miners," Treasury Undersecretary for Terrorism and Financial Intelligence Brian E. Nelson said in a statement.

“The international trade in wholesale, physical gold depends on confidence. The initiative announced today underlines the confidence that all participants in the market can have in the integrity and accountability of the gold they trade, and the gold they buy,” Ruth Crowell, CEO of the London Bullion Market Association said in a statement. “This is a major advance in furthering transparency for the common good of the gold industry.”

Gold has seen an uptick in price in recent months, especially following Russia’s invasion of Ukraine, which caused market instability and led to economic sanctions against Russia. Since early January, gold prices are up 6.4% to $1,921 per troy ounce.

This story was originally featured on Fortune.com