Commodities are fungible assets exchangeable for trading on the same market. The most common commodity to guarantee is gold, which is a form of precious metal.
Gold and silver backed by raw materials have long been a medium of exchange and a store of value, before being abandoned in the 1970s.
If we look at the gold standard, it was a monetary system that directly linked the value of a currency to that of gold. A country on the gold standard cannot increase the volume of money in circulation without increasing its gold reserves.
No country currently supports its currency with gold, but many countries have already done so, including the United States.
For half a century from 1879, the Americans could exchange $ 20.67 for an ounce of gold, but the United States effectively abandoned the gold standard in 1933 and completely cut the link between the dollar and gold in year 1971.
There is a long list of ICOs that are supported by commodities.
For stable coins supported by gold, a coin represents a specific value of gold (for example, 1 token = 1 gram of gold). Physical gold itself is often stored in the safe of a trusted third party. While stable commodity backed coins are not as popular as trust backed coins, they do offer a viable alternative to those looking to trade in tokens secured by real and tangible value through precious metals.
There are also stable parts that are backed by petroleum. One example is the Petro coin, a coin backed by Venezuela’s oil reserves. Still, there are many fault finders who indicate that the Petro coin is a scam.