It is, however, subject to its own issues. A commodity-based currency faces the prospects of someone cornering that commodity. Imagine a diamond- or silver-based currency ... then consider DeBeers or Hughes.
Nature might intervene too. Say someone scores a mother lode of gold, for sake of discussion doubling the world gold reserves - and the whole mine is owned by one person ... that would kinda screw up the economy in a hurry.
In a twist, I'd contend that we don't have so much a fiat currency insofar as the gov't prints money on a whim, we have a debt-based currency which is - as nobody has discussed - the only viable format for the virtual currency which we really have. What money do you have? ah, but how much is physical (presidential portraits included) vs. how much is an IOU in a digital ledger at the bank, which [insert chain of events here] is registered as an IOU to the Federal Reserve? So long as you want to use "plastic" as your practical currency, we MUST carry trillions in debt.
It's a long jump for a currency from virtual IOUs to gold, only to find that's not much more stable either.
Gee the Roman Empire only survived 400 years on the Gold std..