Concepts

What is a Commodities Exchange?

A commodities exchange is a marketplace where people buy and sell raw materials and primary goods. Think of it like a farmers' market, but instead of fruits and vegetables, people trade things like gold, silver, oil, wheat, and coffee.

Commodities in Plain English

Commodities are basic goods that are interchangeable with other goods of the same type. One ounce of gold is essentially the same as any other ounce of gold, regardless of who mined it. This interchangeability is what makes commodities tradeable on an exchange.

Commodities generally fall into two categories:

• Hard commodities — natural resources that are mined or extracted, like gold, silver, oil, and natural gas
• Soft commodities — agricultural products that are grown, like wheat, coffee, sugar, and cotton

Open Mandi focuses on precious metals — specifically gold and silver, two of the oldest and most trusted stores of value in human history.

Why Gold and Silver?

Gold and silver have been valued by civilizations for thousands of years. Even today, they play important roles in the global economy:

• Store of value — people buy gold and silver to protect their wealth against inflation and economic uncertainty
• Industrial use — silver is used in electronics, solar panels, and medicine; gold is used in electronics and aerospace
• Safe haven — during times of economic stress, investors often move their money into precious metals

How Does an Exchange Work?

An exchange is simply a place where buyers and sellers come together. Here's how it works in simple terms:

1. A seller lists a price — "I want to sell gold at $2,850 per ounce"
2. A buyer makes an offer — "I want to buy gold at $2,845 per ounce"
3. When prices match, a trade happens — the exchange automatically connects the buyer and seller

The difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) is called the spread. A smaller spread usually means a more active, healthy market.

Price Discovery

One of the most important functions of an exchange is price discovery — the process of determining the fair price of something through the interaction of buyers and sellers.

Nobody sets the price of gold on Open Mandi. Instead, the price emerges naturally from what traders are willing to buy and sell at. If more people want to buy than sell, the price goes up. If more people want to sell than buy, the price goes down. This is the free market in action.

Open Mandi as a Commodities Exchange

Open Mandi brings this traditional concept into the world of cryptocurrency. Instead of using traditional money through banks and brokers, you use stablecoins (USDT and USDC) to trade gold and silver futures contracts.

The result is a commodities exchange that's faster, more transparent, and accessible to anyone with an internet connection — all while teaching you how real financial markets work.