Nov 22, 2021 - Economy

Crypto group tries to claw back fees after failed Constitution bid

Scott Rosenberg

A meta photo of people taking photos of the U.S. Constitution. — Photo: Yuki Iwamura/AFP via Getty Images

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

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Crypto group tries to claw back fees after failed Constitution bid

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