A diamond can only be created when carbon molecules are put under high pressure in a high temperature area (although the temperature is comparatively cool, considering where the location is). There are only two places on the entire Earth that meet these conditions: the lithospheric mantle (which is located below stable continental plates), and at the site of a meteor collision.
The diamonds found in impact craters are very small, and are called microdiamonds or nanodiamonds. These diamonds would probably not qualify as GIA diamond rings, due to their size. These tiny diamonds are able to form because a collision from space debris usually results in extreme pressure and temperatures.
Diamonds and graphite alike are known as Allotropes of carbon. An allotrope is a substance created by a certain behavior of a certain chemical element, meaning that the atoms are bonded differently than normal. This is sort of like an isotope, which is an atom of a chemical element that has a different number of neutrons.
These stones may be very rare on earth, but on other planets where conditions are more extreme, they may be quite common. On Neptune, for example, the atmospheric pressure is such that molecules of carbon are forced into the correct formation to make a diamond. It is theorized that there may be small diamond crystals suspended in the atmosphere itself. This atmosphere would be a dream for someone searching for best value diamonds or a cheap engagement ring!
On Earth, diamonds are brought closer to the surface via volcanic activity, but there are some diamonds on Earth that are thought to have been brought here by asteroid…