In 1848, a humble American carpenter named James W. Marshall caught sight of gold shimmering in a California river. By the next year, the news of plentiful gold had spread around the world, and hundreds of thousands of people rushed to California from almost every continent on earth.
Dubbed “Forty-Niners” after the first year of the California Gold Rush, the waves of immigrants hoped to discover their own rich veins of gold and strike it rich. In reality, very few of them became wealthy. James W. Marshall himself never turned a profit from the discovery that started it all.
Just like the California Gold Rush of the mid-19th century West, today’s gold rush begins with mining, though mining Bitcoins is a bit more complicated than panning for gold.
The success of the few 49ers parallels the stories of early Bitcoin investors like Jered Kenna, who paid 20 cents each for his first Bitcoins in 2010. Today he’s one of the world’s leading experts on the cryptocurrency, and holds a Bitcoin portfolio worth undisclosed millions.
The modern Bitcoin craze echos many elements of the mid-19th century Gold Rush. When the Gold Rush began, California had little or no organized law enforcement, leaving 49ers to work out their own system for staking claims. Today, lawmakers struggle to understand exactly what Bitcoins are and how they work, let alone how to legislate their use. Some are still updating the books to recognize Bitcoins as legal currency.
The massive influx of thousands of people to the West Coast in less than a decade wrought lasting changes. San Francisco went from a population of 200 to over 30,000 in just over 5 years, and California created a state legislature, elected a governor, and became a state in just 2 years. The changes weren’t all good: the mining techniques wrought harm on the rivers, lakes, and overall landscape. The Gold Rush also increased tensions between the native California Indians and the settlers who forcibly removed them from their homes.
It’s impossible to know today how Bitcoins and the new wave of cryptocurrency will impact the economy. Widespread adoption of Bitcoins, which are global and practically untraceable, will change the landscape of the global economy, but the exact results are impossible to predict.
Bitcoin Mining vs Gold Rush [Infographic]