#6. The financialization of everything

November 29, 2021

Last week, I bid on an original copy of the constitution in a Sotheby’s auction.

I did it with 17,000 new friends via ConstitutionDAO. Over the course of a few weeks, ConstitutionDAO organized and mobilized 17,437 people to collectively raise over $40 million to bid on the constitution. The constitution was originally expected to go for around $28 million, so $40 million was plenty for a very, very competitive bid. Competitive it was, but win it did not (auction dynamics make it very difficult to win when everybody knows the one bid you will place). It would have been fun to own a piece of the constitution, but I’m glad we didn’t win.

The organizers of ConstitutionDAO were incredibly careful to position any money coming to the organization as a donation to preserve the document rather than an investment. The goal was not to flip the constitution like a house on HGTV, but to lend it to a Smithsonian-like institution for all to view. But if we had won, we would have had discrete, fungible, and tradable units of the constitution. The constitution through ConstitutionDAO was destined to be an investment. Even if you only own a fraction of the constitution (or technically the organization that owns it), people will pay you for that ownership right. With fungible shares, this copy of the constitution that would have never gone to auction again would have actually been traded on the market in perpetuity.

This accidental financialization doesn’t stop at the constitution. We’re in the process of securitizing and financializing everything. Much like ConstitutionDAO, many NFTs are securitizing an artifact/moment that have never been securitized before. People have created NFTs of everything from Jack Dorsey’s first tweet to a clip of Lebron James. The latter is particularly interesting because we are now not only securitizing things, but moments in time. Technology allows us to now securitize and trade everything - jpegs, moments, and historical documents sitting on museum walls. The securitization of everything is underway. With Pandora’s box opened, the only decision for fund managers is to decide how and when to incorporate these new alternative assets into their portfolios.