The warm waters of the Gulf Stream meet the cold waters of the Labrador Current at Cape Hatteras. Diamond Shoals extends for about 25 miles southeast from the Cape. When the two currents collide the white water often resembles diamonds (http://iwitness.abc11.com/Media/View/655312).
From the earliest days of European settlement in North America this area was recognized as very dangerous to shipping. The waters near Cape Hatteras have come to be known as the "Graveyard of the Atlantic" because of the numerous shipwrecks there. Tradition has it that Alexander Hamilton was the first to use this term, in 1773. Hamilton also advocated for constructing a lighthouse at the Cape to warn captains of the dangers of approaching too near the shoals [editorial note: please see my comment for a clarification].
Our latest Ocracoke Newsletter is the story of the unique "Ocracoke Greeting." You can read it here: http://www.villagecraftsmen.com/news022113.htm.