#ConstitutionDAO puts the museum world on notice
Crypto investors failed to buy the U.S. Constitution, but they succeeded in showing the power of Web 3.0
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This week I, essentially, watched my book play out in real time as a pool of crypto investors raised more than $40 million in an effort to purchase a copy of the U.S. Constitution. Though the bid failed, the spectacle put the museum and history worlds on notice—not to mention the art and finance worlds—and offered a lot of food for thought for how citizens can engage with history in a Web 3.0 world. There’s a lot to unpack, so let’s get into it.
First, the basics: On Constitution Day this past September, Sotheby’s announced it would auction off a copy of the U.S. Constitution that had been in a private collection for more than 30 years. The document was created in 1787 after delegates met in Philadelphia to draft a new national charter to replace the ineffective Articles of Confederation. Once the final Constitution text was agreed to, copies were printed for delegates to bring back to their home states. About 500 such editions were made by printers John Dunlap and David Claypoole.
(The final Constitution text was also printed by Dunlap and Claypoole in a newspaper called The Pennsylvania Packet and Daily Advertiser. The National Constitution Center in Philadelphia owns one of those original newspaper printings. The original handwritten Constitution signed by all the delegates is at the National Archives in Washington, D.C.)
Of the 500 delegate copies, only a handful still exist. Most are in libraries or archives and two are in private collections. One of those collections belonged to S. Howard Goldman. Goldman was born in New York City in 1930, worked as a mortgage broker in a family business, and later became a partner in a prominent development firm. Successful in real estate, he devoted a portion of his wealth to collecting rare Americana as well as supporting organizations such as the American Antiquarian Society, the Supreme Court Historical Society and the Manuscripts Society. In 1988, he purchased at Sotheby’s an original printing of the U.S. Constitution after it became available from a Philadelphia private collector, adding it to his already-extensive collection of early American artifacts. The purchase cost him $165,000.
Goldman died of cancer in 1997. The document passed to his widow, Dorothy, who established the Dorothy Tapper Goldman Foundation to preserve historic artifacts and fund research on civics and American history. Their copy of the Constitution was exhibited at the Museum of the American Revolution in Philadelphia, the U.S. Supreme Court, the National Constitution Center and the New-York Historical Society, among many. Finally, in 2021, Mrs. Goldman put the item up for auction once again, stating that the proceeds would benefit her foundation. The auction would happen on November 18 as part of a Sotheby’s event marketed as The Now Evening Auction.
(Note: there’s a whole history of private artifact collecting to unpack, and the generations of American businessmen-turned-philanthropists who have purchased historic items and loaned them or donated them to museums. Among them are David Rubenstein, Albert H. Small and Jay I. Kislak. More on this in a future History Club.)
At some point, a group of young professionals learned about the auction and suggested to each other that they should bid on the Constitution using cryptocurrency. What began as a joke quickly turned into a serious proposition: why not pool a bunch of crypto together and raise enough money to make a bid? Emboldened by meme stocks such as GameStop and “shitcoins” such as Doge coin, which had reached billions of dollars in market cap overnight, the crypto enthusiasts felt they could realistically raise the amount needed. If successful, the document would be owned by a group of Average Joe’s and Jane’s, not a single wealthy billionaire. That collective would then decide what to do with it: place it in a museum, tour it across the country, maybe even tokenize it on the blockchain and turn it into NFTs. Everyone involved could “own” a piece of the U.S. Constitution. It would be By the People, For the People.
(**Some definitions for the unfamiliar: Tokenization = the process of converting assets into a digital representation, or token, on a blockchain network. Blockchain = a record of transactions organized into blocks on a peer-to-peer network and linked together in a single list. NFT = a unique and non-interchangeable unit of data stored on a blockchain.**)
The core team began to mobilize. Some worked on marketing and communications. Some worked on legal and financial. The group established a decentralized autonomous organization (called a DAO, for short) that would be governed by a token called “PEOPLE.” Web users from around the world could send crypto into a shared account, and in exchange each would receive a proportional amount of PEOPLE tokens. If the bid for the Constitution was successful, token holders would hold voting power in the DAO to determine what would happen to the document, where it would be exhibited, and how it would travel. It was branded #ConstitutionDAO.
The DAO could not legally bid on or own the document, however. So, the core contributors established an LLC that would perform those roles, and promised to make the LLC beholden to the wishes of PEOPLE token holders. Meanwhile, the core team began tweeting on November 11 that they were going to buy the Constitution. A website was created with the tag line, “What if we held hands and bought the Constitution together?” The first of many Nicholas Cage memes appeared encouraging people to steal buy the constitution from the wealthy, referencing the movie National Treasure wherein Nick Cage’s character steals the Declaration of Independence. A Discord server was set up for token holders and project supporters to exchange ideas, suggestions, jokes and memes (there were a lot of memes). Supporters of the project changed their Twitter handles to include parchment scroll emojis. The hashtag #WAGBTC began trending (WAGBTC = we’re all gonna buy the constitution). Participants branded themselves as “misfits,” “losers” and “degens,” taking back American history from the rich.
Donations began to come in: $300,000 in the first hour became $1 million in soft pledges, which became $2 million committed, which became $3 million committed. More than 2,000 people joined the Discord server. Influencers in the crypto and tech worlds tweeted about the project, generating hype and claiming it perfectly embodied the ethos of Web 3.0 (more on those in a bit). Media stories were written and journalists tweeted about the effort to their followers. The pot grew to $5 million. One evening, hundreds of people in the Discord listened to the National Treasure soundtrack together. At one point, $300,000 was contributed in a span of 15 minutes.
Three days before the auction, there were 8,000 people in the Discord and $10 million in soft commitments. VICE published a story. Coindesk published a story. Two of the core team members appeared on CNBC’s Fast Money. More blue checkmarks tweeted about how fast money was being raised while counting down until auction day. Three days to go. Two days to go. Crypto investors Metaversal announced a $1 million contribution live on Clubhouse. Two nights before the auction, hundreds of people listened to a live reading of the Constitution in the Discord while ASMR played in the background. One night before auction, the DAO raised $5 million overnight. $12 million became $14 million. $14 million became $17 million. Then $20M. Then $30M. A theme song got created (warning: it’s extremely catchy). By auction day, the DAO had more than $40M at its disposal to bid on the document. Confidence was high that #WAGBTC would prevail!
Auction night did not go as planned, however. Streamed live on YouTube while also being monitored in the Discord, the bidding came down to two designated Sotheby’s senior representatives, Brooke and David. Brooke and David went back and forth, raising the price from $15 million to $30 million to $40 million. Nervous DAO members asked in the Discord: Are we Brooke? Are we David? No one knew. Once past $40 million, more nervousness set in. Was there enough in the pool? Should they have raised more? Finally, David relented. Brooke placed the winning bid on behalf of her unknown buyer, a record $43.2 million. People began cheering: #WAGBTC had done it! A Twitter Spaces chat opened up to celebrate. Others weren’t sure. Maybe Brooke wasn’t our girl? Finally, after much confusion and misinformation, the DAO confirmed they had lost. The people had not bought a copy of the Constitution. Rather, it was revealed a day later that Brooke represented Ken Griffin, CEO of Citadel. The crowd-funded crypto enthusiasts had lost to a billionaire hedge fund owner. The final twist of irony? Citadel has been implicated in the GameStop craze that captivated Wall Street in early 2021, accused of purposefully halting sales of GME shares to prevent small investors from squeezing short-sellers on Wall Street. The Sotheby’s auction turned out to be the crowd-sourced Web v. the boardrooms of Wall Street, Part II.
The DAO had money to bid higher. But as I participated in the Discord server in the days leading up to the auction, it became clear that core team did not have a vision for what they would do with the document if they had won. At several points I’d suggested they would need additional funds to house and preserve the document in climate-controlled storage, funds for security and conservation treatments, and they would need to provide funding to any museum that would accept the document on loan. Most institutions cannot suddenly care for and exhibit a multi-million-dollar artifact. More would be needed to maintain the document for the next 10 or 20 years—if not longer—and it seemed there was not much of an appetite for that responsibility. The DAO had an idea; they did not have a plan.
Of course, part of the appeal of the project was that the DAO would vote on the plan. That, too, became unwieldy. The Discord server reached more than 20,000 people and more than 17,000 people contributed to the fund, making them all voting members. Yet the DAO did not know how it was going to vote: ranked choice voting, quadratic voting, one vote for every PEOPLE token? Attempting to make an informed decision on an invaluable artifact among 17,000 members loomed as a very tricky governance challenge, made more complex by the fact that the LLC would have owned the document, not the DAO. The LLC would have been legally responsible, and can you imagine the negative publicity had they damaged the artifact or not cared for it properly? As someone with 20 years of experience in the museum and archives world, including seven years at the Library of Congress, I could not help but be skeptical.
For these reasons, I did not contribute any funds to #ConstitutionDAO. However, watching the auction on Thursday night with thousands of Internet strangers was riveting, exhilarating and hilarious (the memes were absolutely brilliant). It encouraged me to think deeper about what the future of museums could look like in a Web 3.0 world. Web 3.0 rests on the promise of decentralization. It purports to build a next iteration of the Web where traditional centers of authority have no power. In the finance world, that means circumventing banks, credit cards, Wall Street and companies such as Citadel. In the realm of culture and education, that means circumventing museums and academia. Web 3.0 seeks to liberate ideas, artifacts and power from behind display cases or Ivory Towers. Even as historians see themselves as participants in social movements against repressive regimes, Web 3.0 sees museums and universities as repressive institutions to be rebelled against. Objects in vaults or on loan from high-net-worth individuals must be set free. As one meme in the Discord put it, “It’s not about the money. It’s about sending a message.”
Web 3.0 is also about ownership: ownership of your data, ownership of your money, and, in this case, ownership of your nation’s founding documents. NFTs and social tokens are, at heart, about staking digital ownership in a way that is immutable. That combination of taking power and ownership away from traditional authorities has implications for museums. In the past, museums relied on generous donors who supported programs and exhibits that curators and museum leaders decided on. But young people today want voice and ownership. What would it look like to tokenize objects so that people could own pieces of them? What would it mean to distribute governance so that people around the world decide a museum’s direction? What would it look like to have museum membership Discord channels where people make memes and remix objects? #ConstitutionDAO offered a glimpse of what a 21st century museum could (and should) become.
#ConstitutionDAO also showed us the less cheery sides of Web 2.0 and Web 3.0 that still need to be reconciled. In my book, I talk about how the Web privileges certain types of content, and specifically, how history content on the Web becomes visible and influential through crowd-sourcing, virality, meme culture and newsworthiness. All those ingredients were at play with #ConstitutionDAO, which selfishly validated my research (pre-order here!). #ConstitutionDAO also showed how misinformation can circulate at lightning speeds, and how the groupthink of a crowd can omit critical details. For example, Americans who pay their taxes already own a copy of the U.S. Constitution. The original Constitution at the National Archives is funded and maintained by U.S. taxpayers, and can be viewed in-person and online for free by anyone in the world. No one on Twitter or Discord mentioned that; it was an inconvenient detail that would have diluted the overall narrative of the project. (It should be noted that people around the world contributed to #ConstitutionDAO, not solely Americans. One man contributed from Colombia; another from Uruguay; and the Discord had an entire channel for Chinese speakers). #ConstitutionDAO illuminated how little Americans know about where their tax dollars go, and also how little people know about how museums, archives and libraries work. (See last week’s newsletter for a primer).
The project also framed itself as us v. them, the masses taking on a “bunch of rich boomers,” in the words of one team member. The reality was far more nuanced. The DAO would have never raised so much money without its connections to wealthy individuals. It was just a different set of wealthy individuals. While not hedge fund managers and real estate developers, the core team members included an investment advisor; a venture capitalist; a Stanford data scientist; a co-founder and angel investor; a consultant and career coach; another angel investor; a former Apple employee; another founder; and someone who formerly worked at Deloitte. While a range of people contributed, the core team was not exactly vox populi. A privileged cohort of individuals with networks in venture capital, news media, and angel investing cleverly hyped the project and used their networks to grow it. The team members would have you believe they hit a triple, when in fact they began on third base.
In the end, #ConstitutionDAO followed a familiar Silicon Valley playbook: move fast, build hype, raise lots of money, get a lot of press, break conventions, challenge authority, and, if you fail, move onto something else. Immediately after losing the auction, DAO members began to suggest what to do next: Buy other artifacts? Buy a museum? Create a political action committee? Buy a racehorse and win the Kentucky Derby? Meanwhile, the people who contributed were still attempting to get their money back. Some PEOPLE token holders were looking for ways to flip them or sell them. Others left their money in the account, a sum that could help hundreds of museums across the country preserve countless valuable artifacts that document the American story. Those museums desperately need the ingenuity, creativity and technology of Web 3.0. As it turns out, Web 3.0 needs those museums just as much.
P.S. - We held a pop-up History Club to talk #ConstitutionDAO. Missed the conversation? Follow on Twitter and Instagram to stay in the loop.
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Thanks for the reply. It occurs to me there are also interesting questions here about value. What was it about this item sold in this context which gave it value to DAO participants? Are those factors contributing to value transferable to other items or services offered by or associated with historical items and/or the institutions that steward them? I wonder if this auction somehow tapped into a latent, but common human interest in the "past" as a primary contributor to value, or if the opportunity to beat out the billionaires at their own game drove up the price? It all raises some interesting questions about the history marketplace that we need to understand better.
Very interesting piece Jason. I wonder how this approach might provide capital for museums or history initiatives as you suggest at the end? Or will the ownership and governance challenges prove too counter cultural for both the capitalists and the humanists?