Unknown: see Dennett: Kinds of Minds, he has a fairly good theory for what consciousness is. (To put it short: it's the capability to reflect on one's own thoughts, and so use them as tools.)

At the current state of science and AI, this is what sounds like a difficult (and a bit mysterious) question. For the hunter-gatherers, "what makes your hand move" was the same (or even more) difficult question. (The alternative explanation, "there is a God who began all movement etc." is still popular nowadays...)

Tiiba: an algorithm is a model in our mind to describe the similarities of those physical systems implementing it. Our mathematics is the way _we_ understand the world... I don't think the Martians with four visual cortexes would have the same math, or would be capable of understanding the same algorithms... So algorithms aren't fundamental, either.