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When a physical object or fluid is moving, it contains momentum and kinetic energy.
Momentum is measured as mass x velocity.
Kinetic energy is measured by 0.5mass x velocity-squared.
Einstein asked the question, "Does a body at rest contain energy?" and concluded that it does in relation to the movement of atoms and sub-atom particles within its structure.
He then imagined what would be the sum of energies in the electrons and protons in an object of mass M, and derived the expression
E = MC-squared
because he believed that they would all be moving at the speed of light C.
The 0.5 in the kinetic energy formula disappears because the energies are acting in all directions, not just the direction of travel, since the mass is at rest. The vector sum of the energies gives rise to the Einstein formula.
See the Wiki below for a good description of Einstein's derivation of the formula. See especially the section named "Meanings of the mass–energy equivalence formula".
Also note that Einstein was not the first scientist to postulate an equivalence between mass and energy but only he had the imagination to "get inside the atom" and see what was happening.
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