The Carats Ratio

The wireless NFC chip inside a Diamond Standard Coin or Bar is programmed with a BCC (Coin) token, or a BCB (Bar) token. At launch, a BCC token is convertible into 5,000 Carats, and a BCB token is convertible into 50,000 Carats. The conversion ratio of BCC:BCB is permanently fixed at 1:10, and conversion is free (see Carats Redemption).

Initial Diamond Standard Carats Ratios

5,000 Diamond Standard Carats = 1 Diamond Standard Coin

50,000 Diamond Standard Carats = 1 Diamond Standard Bar

To pay for physical custody and network operations, fees are generated by the Carats Smart Contract by creating additional Carats. Over time, the number of Carats per underlying Diamond Standard Coin or Bar increases slowly, which is reported as the Carats Ratio, initially 5,000:1. This deflation distributes the costs fairly across all users proportional to their current holdings, without reducing their token balance.

For example, if there are 10,000 Coins and the Carats Ratio is 5000:1, there are 50 million Carats held by users. By increasing the Carats Ratio to 5001:1, 10,000 new Carats are created by the smart contract to cover the operating costs, especially physical custody of the Diamond Standard commodities. The custody and administration costs should decline over time, as these expenses diminish as a proportion of total assets.