Is 21.Co Really Building Digital Gold – Part 1
Read the interesting story on how 21.Inc developed. Be inspired by the insights provided to the Bitcoin industry.
What Is The Idea Behind 21. Inc?
The Bitcoin Company with the most money and high profile backers for much of the past years was the one that almost no one knew existed. The company raised $ 70 million with the arcane sounding name 21e6 with the initial investment coming in personal contributions from the elite of Silicon Valley that included Peter Thiel, David Sacks, Marc Andreessen as well as Ben Horowitz. While in the real-time founded by the Stanford wonder kid, Balaji Srinivasan along with four co-founders, 21e6 had proceeded to roll out thousands of computers that were built to do nothing but generate new bitcoins, which was seen as a new energy-intensive computational process referred to as mining. As it comes along with custom-designed chips, with names like those of Yoda and Gandalf, the machines were submerged in a mineral oil solution dispersing the incredible heat generated by the mining process.
As it ended up running up against the difficulty of making money, the company was in the cut-throat business of Bitcoin mining becoming much more difficult as the price of Bitcoin dropped over the last year. Whereas it was found that the company has renamed itself 21Inc. and recently went public with new fundraising round bringing in another $ 56 million on top of the $ 70 million that the company had already raised. As the company has remained tight-lipped about its intentions it is also shifting away from mining bitcoins for itself as well as focus more on distributing mining hardware to consumers to support broader adoption of technology. Whereas now the company’s creation played an important role in Silicon Valley’s embrace of Bitcoin.
The Story Begins In A Dorm Room
Beginning to form in early2013, the startup came into being not long after Srinivasan had stepped away from the genetics startup, Counsyl that he had founded in his Stanford dorm room and turning him into a local star. While it was noted that Srinivasan had been tracking Bitcoin for some time, whereas with more time in his hand, he began talking about how to create a company with Matt Pauker, a cryptographer doing a guest lecture in engineering course that Srinivasan was teaching at Stanford.
Quickly seeing the opportunity in Bitcoin mining, from the time Bitcoin was released in early 2009, the computers were trying to generate Bitcoin taking part in a kind of computational lottery. As the faster the computer could run numbers through a complex equation, known as a hash function, the more are the chances it had to win the lottery and together with it, a bundle of new bitcoins. Whereas by the end of 2012 those Bitcoin enthusiasts were at home already finding faster and faster ways to do the computations and winning more bitcoins with those like the existing computer hardware that are generally using GPU computer chips that are made for processing graphics.
How Did 21.Inc Develop?
With a few particularly ambitious engineers set out to build the so-called ASIC computer chips that could be even more efficient, it was designed specifically for Bitcoin mining. The first of these were deployed in early 2013, together with the joint computing power of all machines connected to the Bitcoin network which came to be equivalent to several supercomputers as these computers were, in essence, securing the network.
Those people who were creating these early ASIC chips were relative amateurs where Srinivasan thought he could do much better by harnessing some of the top minds in Silicon Valley where in addition to Pauker, he brought on as co-founders the experienced engineers Nigel Drego who trained at M.I.T, Veerbhan Kheterpal a Ph.D. from Carnegie Mellon as well as Daniel Firu previously been at PDF Solutions, taking their corporate name from the number of coins that will ultimately be created: 21million.
In the spring of 2013, at that point, Srinivasan also began selling the company to the elite investors of Silicon Valley who were still generally skeptical of Bitcoin where there have been no venture capital firms that had made any of those significant public investments in the virtual currency technology meanwhile Srinivasan had the benefit of a rising Bitcoin price to help his pitch.
To Be Continued In The Next Post
Whereas Srinivasan was successful, the process is defined in the next post. It explains how he maneuvered the company to success thereby building on the Bitcoin mining strategy. This helps him create his space in the Bitcoin ecosystem. The success rate was essentially much bigger than any other. Read on the interesting story of a successful journey that has made ripples in the Bitcoin mining industry.