A diamond is made entirely from carbon, the same element that makes up the graphite used in pencil leads. What gives a diamond the unique properties that differentiate it from common graphite is its physical structure.
A diamond consists of carbon atoms in a face-centered cubic structure. A diagram of this structure looks like a cube with a single dot on each face, Each corner of the cube and each dot represents a single atom. This symmetrical, three-dimensional structure gives a diamond its exceptional hardness. By comparison, graphite has a layered, sheet-like structure, which explains why it can easily be chipped away.
A diamond degrades into graphite under standard conditions because it becomes less stable under normal temperatures and pressures, but the conversion rate is so slow that it can be considered negligible.