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Einstein developed this equation as a result of his theory of relativity. He realized that energy and matter are two versions of the same thing, and can be related by the equation. Since the constant c is the speed of light (fast), and c^2 is super huge, we have a relationship whereby a small amount of mass (m) can be converted into a huge amount of energy (E). Einstein saw where this was going, and urged Truman to fund research in this area (to develop a bomb before the Nazis did). Relativity gives us other strange results too (as an object's speed increases, so does its mass, so that mass approaches infinity as speed approaches the speed of light; as an object's speed increases, its "clock" slows down, approaching zero as speed approaches the speed of light). While these results don't seem intuitive, they have been verified through many experiments.
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