Crypto group tries to claw back fees after failed Constitution bid
The 17,000+ cryptocurrency enthusiasts who collectively funded a losing $40 million bid to purchase a copy of the U.S. Constitution last week face a new hurdle in getting their money back: transaction fees.
How it works: The ConstitutionDAO group used Ethereum to build its war chest, and contributors paid "gas fees" — essentially, network transaction costs — that observers estimated to run about $50 per transaction.
- That didn't mean much to big-ticket participants, but took a big bite out of smaller contributors. The median contribution size was a little over $200, according to the ConstitutionDAO site.
- Participants in the bid collectively spent nearly $1 million on the gas fees, according to one estimate.
The catch: Organizers announced over the weekend that they'd be returning contributors' Ether contributions, but each participant would have to pony up another gas fee for this new transaction.
Between the lines: Transaction costs have long been the bane of all sorts of currency and payment innovations and are one reason that micropayments have never taken off.
- Crypto supporters point out that credit card systems still take a hefty 2% to 3% per transaction.
What's next: Ethereum has plans to streamline its system in ways that might reduce transaction costs, while a slew of new systems are competing to take its place with more efficiently-tooled blockchain systems that cost less to run.
Go deeper: A billionaire's crypto win