Bid to Buy Constitution by a Blockchain-Backed Co-Op Loses to $43.2M Bid

Auctioneer at the head of an auction house crowd of buyers.

Image source: Getty Images

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A group of 18,000 crypto investors chipped in to buy the document, using a blockchain-based construct called a decentralized autonomous organization (DAO) to come together.

Key points

  • Thousands of cryptophiles quickly formed a group named ConstitutionDAO and raised $40 million in a week to try and buy an original draft of the U.S. Constitution.
  • The crypto collective lost the Sotheby's auction last night to a phone bid from a private collector who bought the historical document for $43.2 million.
  • A DAO is a blockchain-based structure where decisions are automated based on complex computer algorithms, removing human error, emotion, and corruption.

In the 2004 blockbuster movie, National Treasure, the film's protagonist Benjamin Franklin Gates -- played by actor Nicholas Cage -- stole the U.S. Declaration of Independence to find an elusive treasure. In an ironic instance of life mimicking art, 17 years later a group of 18,000 cryptocurrency fans banded together under an elusive blockchain construct to buy an original draft of the U.S. Constitution -- only to have the artifact "stolen" out from under them by a winning bid of $43.2 million last night.

We the people decided to unify and buy the Constitution

What makes the real-life version fascinating is that the 18,000 strangers united around a single purpose -- to acquire one of only 13 original drafts of the Constitution -- using decentralized cryptocurrency technology to raise $40 million toward that goal in a week's time. The aforementioned investor collective called itself the ConstitutionDAO, which stands for decentralized autonomous organization (DAO).

Is a DAO a more perfect union?

A DAO -- rhymes with cow -- is built on a blockchain and all decisions are made through an automated system of complex computer algorithms to remove human error, emotion, and shifty shenanigans from decision making at a large scale. However, the automated DAO still requires oversight and monitoring. So its human participants would invest in the system to earn "governance tokens," which empower those vested members the right to contribute to the gestalt via crowdsourcing.

No one is in charge but all investors have a say

If ConstitutionDAO had won the auction, the thousands of contributors who chipped in crypto would not have bought a fractional share of the constitution, but rather the right to oversee how the asset is stored; where it might be displayed; how to make money from this asset; whether it would be sold at auction again; the types of buyers they might consider; presenting other proposals for consideration, and voting on those proposals. While no single individual would own the first edition of the Constitution -- the DAO would be the legal owner -- all DAO members would have a say.

It's a fascinating virtual arrangement that's paradoxal in its elusive existence and stunning ability to mobilize (and monetize) quickly toward a shared goal.

What's next for ConstitutionDAO?

Since the DAO lost the auction, the aggregated funds are assumedly still held by the ConstitutionDAO digital vault. It's not clear how or if those funds will be allocated back to the donors or whether the ConstitutionDAO will even continue to exist.

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The only thing that's crystal clear, is if they had Nicholas Cage in the group, the outcome likely would have been much different.

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