# Carats Intro

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Carats are a unique commodity token issued by [Diamond Standard Coins and Bars](https://diamondstandard.co), that can be used for payments.  These commodities are approved to settle CFTC futures and options, and to be held by ETFs.  This has unlocked a $1.2 trillion asset for investors for the first time.

Diamond Standard Coins and Bars are the world's only Smart Commodities. They contain wireless encryption chips that issue vault receipt tokens (or Carats), when they are inside an approved vault. &#x20;

Diamonds are extremely dense in value. They are the only scarce natural resource on Earth small enough to seal with wireless hardware, and still be authenticated optically. If you seal gold inside plastic, you can no longer authenticate it.

Carats are tokenized electronic documents of title issued from immediately deliverable, blockchain-native and wirelessly audited Diamond Standard commodities. As a vault receipt for a specific physical asset, Carats are neither securities nor a virtual currency, exempting them from some money transmission regulations.&#x20;

The underlying commodities are fungible, market traded, physical and regulator-supervised, and feature integrated wireless authentication, audit and tokenization technology.&#x20;

Carats can be issued from the Diamond Standard commodities only upon their deposit into a approved vault, to enable their immediate delivery to any owner returning Carats.&#x20;

The cost of physical custody and maintenance is paid by a slow increase in the number of Carats per commodity, which does not diminish any user’s balance.&#x20;

The reserve is autonomous: Diamond Standard commodities can be deposited or withdrawn by users at any time, to create or destroy Carats, without requesting permission from a sponsor.

The Carats Smart Contract is governed by Bitcarbon tokens. See[ ](/diamond-standard-carats-bitcarbon/bitcarbon/bitcarbon-intro.md)[BITCARBON](/diamond-standard-carats-bitcarbon/bitcarbon/bitcarbon-intro.md)


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