Bitcoin’s Path From Insurgents’ Talisman to Tool of Big Tech

At first, you didn’t even need a pickax. The earliest prospectors of the California gold rush ventured into the Sierra foothills as solo travelers, sloshing through streams in search of nuggets dislodged by the current. That, at least, is the prevailing image: The individual renegade who headed west to strike it rich by his own initiative. But soon there were too many prospectors and too little easy gold. The task became more resource-intensive, requiring water to blast away the hills. That meant size and scale, to build pipes and aqueducts—out of reach to all but a few.

I thought of that history while reporting, earlier this month, on an alleged pyramid scheme involving the digital gold rush of the 2010s, in which people were sold on the idea that mining bitcoin was a path to self-won bounty. Early in this decade, had I possessed the foresight, I might have set up my home computer as a bitcoin miner and reaped healthy rewards. The key was openness. Bitcoin wasn’t worth all that much then, but anyone could do it. The underlying technology, blockchain, seemed to make sure of that, by eliminating the need for intermediaries. The platform would maintain our independence, our state of decentralization.

Then bitcoin went the way of gold. Why? Because it started making people rich.

With more miners competing, mining got more expensive. Higher demand for electricity meant you needed more efficient servers to yield a profit and, soon, economies of scale. Corporations took an interest. Today mining farms are a massive, government-subsidized business. Bitcoin, in turn, became a financial instrument. The banks invested, along with the pension funds. The Commodity Futures Trading Commission declared it a commodity, just like gold. How do you get bitcoin these days? When I bought a tiny fraction of one bitcoin the other day, after years of stubborn resistance, I did it through a popular investing app that sells my data to hedge funds who use it to better inform their…

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