Irrationality of Crypto
Continuing from Buying part of the US Constitution
The ConstitutionDAO lost. What a bummer. But this was a valuable experience, although expensive. Lessons learned:
- One of the promises of cryptocurrency was cheaper fees than banks for transfers. And this was true for Bitcoin and Ethereum at first, until their prices soared. I donated about $200 of Ethereum to the ConstitutionDAO yesterday. I spent more than that on fees to transfer from an exchange to my wallet, and then transfer from my wallet to the protocol used by ConstitutionDAO to collect the funds. Because we lost, they will refund the money to everyone. But we have to cover the gas fees. It wouldn't be worth it. I'd rather keep it with them for their future endeavors. There's no telling if or when Ethereum gas fees will be lowered. This is also a question for other blockchains, which projects have started moving to because of the cheaper fees. How long will they stay that way? Will there be perpetual chain hopping as new ones are created to solve the pain point of high gas fees when these ones skyrocket? I'm stingy when it comes to spending US dollars on things like food or bank transfers. But I paid these exorbitant fees in ETH without much hesitation. Part of it is because I didn't actually spend that much. I had held crypto for years, and it's only worth that much because it went up in price. How much fiat I put in wasn't worth that much. But still, if I had sold back to USD instead of paying these fees (which were ultimately wasted since we lost), then that probably would have been a wiser choice.
- I tend to look down on people who cheer for sports teams. They're all the same to me. I don't care about home cities or athlete celebrities. Same for politics. Democrat or Republican are nothing more than national sports teams. People who cheer for only one of these are probably missing out on the bigger picture. If they accept the entire bundle of policies from their team, they likely care more about being accepted by their community rather. People who support policies based on rational values will usually have a mix of both sides, and won't fit nicely into either party.
Tonight, in the auction of the Constitution, it came down to two parties. I was watching the livestream, and reading the YouTube live chat as well as the Discord general chat. The funny thing was, no one knew who to cheer for. It was not communicated which bidder represented the ConstitutionDAO. The viewers were animated with the confusion, and making guesses who was our person. Despite that, I got the sense of being part of something bigger than myself. I wasn't talking to anyone, but I felt part of the group. I had donated. We were supporting the same cause. And it was fun. So now I'm looking down on myself for looking down on others who enjoy sports or politics.
- DAOs are going to become bigger in the future. I'm especially interested in them because I'm into community: how to grow and manage them. Through this experience, I got to see some some good and bad ways to manage a DAO. It was amazing how many people and money came together in less than a week through the power of social media, memes, and pure emotional power due to the content of a national constitution and what it symbolizes. The core team was impressive in how they put this together in such a short amount of time. The fact that they got to the point of being able to participate in the auction was an amazing feat, much less actually have a hope of winning. If they had another day or two, things could have turned out much differently with the bidding. Of course, not everything went perfectly
- I got to see how art auctions run. And now I see the NFT craze through a new perspective. It's not new. People were there bidding millions of dollars on ugly, physical paintings. It's just that the new generation is doing this digitally. Sotheby's was the auction house. They were established in 1744, even before the US Constitution was written. They are going to have to adapt to this new wave of technology if they want to survive. I saw they were even accepting ETH payments for some of the art pieces on sale.
Although we lost and I can't brag about partially buying the US Constitution, it was a fun night. It was an emotional roller coaster. After the auction ended, no one knew who won. At one point, we were told that we did win. So I got to experience elation. Then we got official news that we didn't win. Then I experienced disappointment, even a little sick to my stomach.
Either way, this is history in the making. This set a precedent. DAOs are going to become more popular. It's only a matter of time before we start seeing them pop up everywhere for everything. It will become a new bubble. There will be scams and rug pulls. But there will be solid ones, too, giving people decentralized power.