The Bitcoin Gold Rush - Who Has Made The Money?

In 1848 a certain Samuel Brannan strode through the streets of San Francisco, holding aloft a vial of gold, shouting "Gold! Gold! Gold from the American River!"

This heralded the start of the California Gold Rush. Soon people came from far and wide certain in the belief they would make their fortunes. In 1849 so many came they even earned themselves a nickname: the "forty-niners". 300,000 people came in all. Many spent what little money they had to get to California, buy supplies and subsist, only to return home with little or nothing to show for their efforts. A few got very rich.

In 2009 Satoshi Nakamoto invented bitcoin. It's very clever. Online payments can be made just about free of charge. Money can be sent anywhere in the world instantly. Word soon spread amongst the geek community. Enthusiasts set their PCs to the task of mining bitcoins. Easy to do on a laptop in the early days. Some mined large numbers of bitcoins but took little care of them as they were worth only a few cents each.

But by the end of 2012 the value of one bitcoin had reached $13. People who had mined hundreds of the things found they had made thousands of dollars. This was an easy way to make money. Word spread. More started mining.

But mining becomes more difficult with time, specialist hardware is needed, and it uses a lot of electricity. But no matter, it was still easy money.

All the elements of a new gold rush were in place. All you needed was some mining equipment and you could be rich.

The rich and famous even jumped onto the bandwagon. The Winklevoss twins bought in. Richard Branson bought some. Max Keiser proclaimed bitcoin as the future.

In 2013 the bitcoin price soared from $13 to $1000. The early investors had become rich! All that mining hardware had paid off. People were sitting on million dollar fortunes - and more.

But were they? Or were they simply holding fool's gold? At the height of Tulip Mania, those owning tens of tulip bulbs knew themselves to be richer than their wildest dreams.

And so it is with bitcoin. If you sold your multi million dollars worth of bitcoin at $1000 you may well have become rich. But you are a rare exception to the rule. Most will hold their bitcoin until they becomes worthless - or certainly worth less than they bought them for or less than it cost to mine them.

So who has made the money?

Well, why did Samuel Brannan stride through the little town of San Francisco proclaiming "Gold, gold!"? He had just set up a store selling gold prospecting supplies, that's why. And yes, he got rich, very rich, selling picks and shovels.

People are paying thousands of dollars for their bitcoin mining equipment. When the bitcoin gold rush dust settles, it will be the Samuel Brannans who emerge with the money.