Here’s some very good news for anyone who is concerned that Americans do not appreciate the U.S. Constitution. A copy of it was recently auctioned for the stunning sale price of $43.2 million.
The frenzied bidding resulted from a new cryptocurrency phenomenon called a decentralized autonomous organization, or DAO. That’s pronounced “Dow,” and it’s no relation to the staid and venerated index that is emblematic of traditional Wall Street trading.
What exactly is a decentralized autonomous organization?
A lot of people are going to be asking that question. Andy Serwer, the editor-in-chief of Yahoo Finance, wrote a fascinating explanation with Max Zahn that relates the “ConstitutionDAO” story.
It began when Sotheby’s auction house in Manhattan let it be known that they would be selling a copy of the U.S. Constitution, a rare first printing of the document that was made for the delegates to the Constitutional Convention. There are believed to be only 13 surviving copies that once belonged to those men who are immortalized in paintings, and some of them on the currency.
It ended in a wild auction, with million-dollar bids phoned in by anonymous bidders and the price flying up past $30 million until finally it all came down to just two bidders. The winning bidder was Ken Griffin, the billionaire founder of a hedge fund and financial services company. The losing bidder was 17,437 donors who had chipped in a median donation of $206.26 through a platform called Juicebox.
That group was ConstitutionDAO.
Software engineer Jonah Erlich was one of 30 people who became the “core contributors” of the DAO and then invited other people around the world to contribute to it using a specific cryptocurrency. The DAO was set up exclusively to buy the Constitution in the Sotheby’s auction. Erlich told his story to Nilay Patel for The Verge, and it’s eye-opening for anyone who has watched cryptocurrency from a distance and wondered exactly what it was and whether it mattered very much to anybody else.
The definition of a DAO, Erlich explained, is a group of people that come together around a shared community and a shared resource. “The most fun description I’ve heard is that a DAO is a group chat with a bank account,” he said.
The bank account is in cryptocurrency. ConstitutionDAO raised approximately $47 million in Ethereum, “approximately” because the value of Ethereum in dollars fluctuates constantly. It’s worth only what someone will pay for it. Cryptocurrency is not backed by the full faith and credit of any government, although taxpayers should stay alert. If it all comes crashing down, we can expect pressure for another massive bailout of the legacy financial services industry to the exact extent that the value of cryptocurrency affects the value of the holdings of major banks, foreign governments and politically connected investors.
The precise plan for what ConstitutionDAO was going to do with the Constitution was never fully developed. All the “token” holders who had purchased a piece of the action would have had some version of a vote as to which museum would be chosen to house the document and what the text next to the display case was going to say.
This is one of the most interesting and hopeful parts of this story. There were more than 17,000 people in the cryptocurrency community who were so passionate about the Constitution that they opened their crypto wallets to buy tokens of ownership or governance of a rare copy of America’s founding document.
The Constitution isn’t just another collectible. It’s the charter of the United States, the only country ever to be founded on the idea that individuals have rights, and that the purpose of government is to secure and protect those rights. The Declaration of Independence explained the idea, but the Constitution contains the precise instructions for building a free country.
Today, after nearly two years of quasi- or fully authoritarian mandates from government officials, mostly narcissists of middling intelligence and bullying personalities, it’s very good news that there are so many people who had an instant and emotional reaction to the idea of banding together to buy freedom’s greatest symbol and blueprint.
Probably by the time you read this, the government will be trying to crack down on DAOs, which makes the story of ConstitutionDAO that much more important to understand. It’s not about money. It’s about freedom.
The government can’t control cryptocurrencies, and it probably can’t control the use of DAOs to crowdfund the purchase of other things, even very expensive things such as high-profile companies, sports teams, and majorities in Congress and state legislatures.
You can buy a lot of elected officials with $43 million, and a DAO might be able to raise $430 million or even $4.3 billion.