A few months ago, I embarked on a side project that explored the intersection of sports and NFTs. During that research, I went deep into "web3" – the world encompassing crypto, NFTs, and the decentralized internet.
If none of that makes any sense, you're not alone. In talking to sports fans across the country, I found that most people had only the vaguest sense of what NFTs (Non-Fungible Tokens) were. A few had invested in some cryptocurrency, but nobody – including myself – really understood the use cases for most of this technology.
Now, I think there's a clear example.
We the $PEOPLE
One of the 13 remaining copies of the United States Constitution is going up for auction in a few hours1. It's been more than 30 years since an original copy has been auctioned, and there's only one other that is privately owned. This copy is expected to fetch up to $20 million.
That high price tag is why auctions are traditionally a sport for the super rich. But the internet – and now crypto – changes that.
One of the hallmarks of web3 is the trusted coordination of money between strangers. Instead of letting eBay or Visa or Facebook handle a transaction, both parties are trusting an open-source set of code. ("Blockchain" and "smart contracts" are the buzzwords here.) Imagine Kickstarter, but nobody ever gets scammed because the money automatically gets returned if they don't receive the product.
Just as you might receive benefits from funding a Kickstarter campaign, there are unique aspects to a web3 crowdfund. In this case, your contribution grants you access to a proportionate share of $PEOPLE tokens. These are "governance tokens", which give the owner a voice in decisions, such as, um, what to do with the Constitution after purchasing it, or what the group should do with surplus funds in the case of winning the auction. In theory, these tokens power a Decentralized Autonomous Organization ("DAO").
Amendments
In the previous sentence, you’ll notice I said, "in theory."
The entity in charge of this effort is named ConstitutionDAO, but it’s not technically a DAO. The entity isn't authorized to place bids at Sotheby's – nor is the auction house capable of accepting cryptocurrency – and current securities laws make it prohibitive for contributors to actually own the Constitution. (Thus: "governance tokens")
Ironically, this watershed moment for web3 requires a certain amount of trust. A key promise of crypto is the ability to coordinate money without needing to trust other people; you just trust the code.
In a “real” DAO, there would be no uncertainty about how decisions get made. There wouldn’t be a temporary LLC that can legally ignore the wishes of the DAO contributors.2 But all of this is new. It’s going to be messy for a while.
As the NYT put it yesterday,
Buying the Constitution, it turns out, is a hard, weird project, made even harder and weirder by the choice to do it in less than a week with a bunch of internet strangers, inside a new, complicated organizational structure that nobody outside the crypto world fully understands yet.
A More Perfect Internet
Many of you may still be wondering what the point is. Why would someone willingly spend money on this?
1. Because it’s fun.
I think this is always a good reason. There have been so many memes.
It’s been a blast watching this project come together over the past few days, especially as it blew past the original $20million target.
2. Because it’s symbolic.
I really don’t know what happens next. But I think what has already happened is significant.
The U.S. Constitution has tremendous significance in our modern society. Alongside their contributions, people from around the world left notes of what this moment meant to them:
Every person contributed for their own reason. Immigrants, crypto enthusiasts, paranoid patriots, and trolls all participated in this crowdfund.
But even more than the What and Why, the How is historic.
As stated on the ConstitutionDAO website:
“Decentralization and cryptocurrency (web3) have created structures that allow people to self-govern with unparalleled levels of autonomy and freedom. It’s fitting that we use this technology to honor and protect the greatest historical tool for human governance: the U.S. Constitution.”
As I said at the top, I think a crowdfund to buy the Constitution is one of the clearest “use cases” we’ve seen for web3 technology – at least for those who haven’t already been crypto-pilled. Unlike most NFTs, the Constitution is a physical, recognizable object that has obvious value. That familiarity and mainstream appeal was why I suggested this weekend that ConstitutionDAO could be an inflection point for the web3 movement.
In less than a week, the project likely got thousands of people to set up Ethereum wallets for the first time, and the mainstream coverage (including the front page of the WSJ today) will draw many more closer to doing so.
As with all new technology, we don’t know how it will be applied in the future. The founders of this country could never have predicted how American democracy would evolve.
ConstitutionDAO is a fun example of people coming together, but there are other ways to coordinate “financial flash mobs". Crypto transactions are public but also have the potential to be anonymous.
New tools are fun, but we have to learn how to use them.
Or, to quote George Washington in Hamilton:
“Winning is easy… governing’s harder.”
By the time you read this, the auction will be over. I started this piece earlier in the week, when ConstitutionDAO had raised only ~$5million of its original $20million goal.
For what it’s worth: I trust the team behind ConstitutionDAO. The key organizers have publicly identified themselves, and defecting would be a massive risk to their personal reputations and careers.