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Join us as emergency physician and digital asset consultant Noah Kaufman dives into the evolving role of Bitcoin in investment strategies. From its early days as a speculative asset to its current standing in institutional portfolios, we explore why volatility is a feature, not a bug, the potential of decentralized finance, and how practices and organizations can leverage Bitcoin on their balance sheets. Whether you’re a seasoned investor or just starting out, this episode offers insights into long-term Bitcoin strategies and the future of finance.
Noah Kaufman is an emergency physician and CEO, Starbot.
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Transcript
Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast. Today, we welcome back Noah Kaufman. He’s an emergency physician and CEO of Starbot. We’re going to talk about the current state of Bitcoin and digital assets. Noah, welcome back to the show.
Noah Kaufman: Kevin, thank you. I guess this is our third talk now.
Kevin Pho: We have you on every year, and Bitcoin is at a different price every time we talk. Last night was a historic event—it broke $100,000. Before we get into anything, for those who may not be familiar with Bitcoin and digital assets, what does $100,000 for one Bitcoin mean to you?
Noah Kaufman: Yeah, you know, it’s a milestone. It’s a stepping stone. It’s hard to talk about something exponential without being hyperbolic, right? On your podcast, we’ve been telling physicians—or, well, I was kind of pounding the table way back in 2019. Just because of the Sharpe ratio and the amazing adoption of this new monetary network, Bitcoin at $100,000 is kind of a stepping stone.
When I say it’s hard not to be hyperbolic, I mean that some people are going crazy celebrating, but really, this is ultimately a multimillion-dollar asset. And, you know, we’re just getting started. It’s still extremely early—a very small number of people own Bitcoin or understand what it is. Believe it or not, I think $100,000 is not that big of a deal. It was expected.
It was expected when I started buying it at hundreds of dollars, then at $10,000, and now $100,000. And now I expect $1 million, several million, and probably, in the next 20 years, there’s a good chance we’ll get to $10 million. I know that sounds crazy, but it’s hard to understand something exponential, growing by Metcalfe’s Law, that is so novel and so important for humanity.
Kevin Pho: Well, tell us, what is Metcalfe’s Law?
Noah Kaufman: Sure. Metcalfe’s Law describes the value of networks. For every participant in that network, the value of the network increases exponentially. The larger a network becomes, the more valuable it becomes exponentially. Of course, there’s a mathematical equation and a lot of research behind Metcalfe’s Law, but in a nutshell, that’s the lay version.
We see it with Facebook and Amazon. Social networks are valued by the number of users and monetized through advertising or other means. That’s how Facebook makes its money. A monetary network, like the U.S. dollar system, has its value intrinsically tied to the value of each unit. Each participant makes the system more valuable.
There’s been no network in history that has reached an inflation-adjusted $100 million market cap and failed. That’s never happened. Right now, we’re at a $2 trillion market cap for Bitcoin. We’re way beyond sustainability. Now there are ETFs, and there’s talk about a strategic Bitcoin reserve. If that happens, things will go crazy.
Metcalfe’s Law is part of the reason why the Bitcoin network is so valuable, whether you agree with it or think it’s a scam. The fact of the matter is, all money systems are Ponzi schemes. This is a big legal Ponzi. It’s crazy, but all it takes is belief, political adoption, and legal adoption. We have that now with ETFs. It’s been de-risked.
Compared to the last time we talked, the value of the network has gone up substantially because the risk has been taken away.
Kevin Pho: So, we started off this year with Bitcoin in the $30,000 range. Now, it has broken $100,000 per Bitcoin. What were some of the triggers that led to its rise this year?
Noah Kaufman: Certainly, the adoption of Bitcoin in the ETF world played a huge role. BlackRock—we all know BlackRock is holding hands with the United States government—gave more than a tacit approval of Bitcoin. Once money managers and Wall Street got into Bitcoin, it really changed the game.
It takes a long time for pension funds and other large funds to be able to buy Bitcoin. Many of them won’t even buy it until it hits the $100,000 mark—that’s a mandate for a lot of pension funds. There are countless trillions of dollars sitting on the sidelines in debt markets, looking for places to invest. Bitcoin is going to be a recipient of some of that capital—quite a bit of it, actually.
This is due to the Sharpe ratio, which measures risk-adjusted returns. Bitcoin has returned 147 percent CAGR (compounded annual growth rate) over the last 14 years. It’s the best-performing asset of all time. It was the most-bought ETF of all time by far, dwarfing gold ETFs. Bitcoin is demonetizing precious metals and taking their place because it’s technologically superior.
It’s completely finite, with 21 million Bitcoins scheduled to exist—94 percent of which have already been created. That means only 6 percent of Bitcoins are left to be mined for eternity. Every four years, the number of Bitcoins mined is cut in half. This is an absolutely scarce, inelastic supply running straight into an ever-expanding demand.
From the early days, I’ve argued that this is such an asymmetric bet with such a great Sharpe ratio for your portfolio. More return for less risk—that’s what the Sharpe ratio tells you. I’ve said, “Why not put 1 percent of your net worth as a physician into it?” Myself and a bunch of friends started doing that when Bitcoin was $3,000, and now most of us are retired. We work because we want to.
I’ve got a ton of Bitcoin, and I feel bad for those listening to White Coat Investor because they’ve been told, “This is horrible. This is bad.” But studies show that putting an asset with a high Sharpe ratio into your portfolio—even at a small percentage—can yield outsized returns for minimal risk. That’s always been the argument. Whether or not you believe in Bitcoin, you need to be agnostic if you want to act as a fiduciary for your family and financial situation.
It’s still extremely early. Bitcoin is going to reach $1 million, then multi-millions per coin. I know it’s hard to believe, but this is exponential adoption. If you look at the chart, it’s a parabola. We’re right here, and it’s going up. You can’t think of it like a stock. It’s a new monetary system—an egalitarian one.
Kevin Pho: Wrapping back to your earlier point, yes, the ETFs were a trigger. But what about global influences, like El Salvador or the Saudis? How do they play a role?
Noah Kaufman: Absolutely. El Salvador adopting Bitcoin was a huge moment. There are also rumors that the Saudis are buying Bitcoin. Just yesterday, Putin made statements that likely pushed it over $100,000. He hinted that Bitcoin is an important world asset, and nobody can control it.
Then there’s Trump. For better or worse, as president, he’s now talking about creating a strategic Bitcoin reserve and buying a million Bitcoin. If that happens, other countries will think, “Oh no, we better get some Bitcoin.” It’s a self-fulfilling process. This is why it’s crucial to remain agnostic. Bitcoin is a new, uncorrelated asset class. Yes, it’s volatile, but it’s volatile while going straight up, unlike fiat currency.
With fiat currency, if you have $1 million today, in five to seven years, it will only have the purchasing power of $500,000. You need to invest to protect your wealth. Even if you invest in the S&P, you face currency risk and inflation. Sure, maybe you made 12 percent CAGR, but after inflation, what’s your real return?
It’s like Pascal’s wager: even if you don’t believe in Bitcoin, the smart thing to do is to buy a little, just in case it catches on.
Kevin Pho: You mentioned White Coat Investor earlier. For the record, I’m a big fan of White Coat Investor and the work they’ve done to bring physician financial literacy into the mainstream. But not just White Coat Investor—if you read finance articles in the New York Times or Washington Post, they aren’t as enthusiastic as you are. Why do you think that is?
Noah Kaufman: First, let me say that White Coat Investor has been a net positive for physicians. I’ve learned a lot from them, and while we’ve had disagreements, I really respect Jim and everything he’s built. That said, I think he got it wrong on Bitcoin.
When something is outside the current paradigm, it threatens existing power structures. Most people are conservative and prefer to stay safe within the status quo. Back when we first talked about Bitcoin, there wasn’t an ETF. Regulation from the SEC was a concern, and it was viewed as risky.
Now, though, it’s different. Even Jerome Powell, the Fed chair, recently said that Bitcoin isn’t a competitor to the U.S. dollar. It’s a speculative asset and a competitor to gold. I agree—it’s a much better form of gold. If it reaches gold’s market cap, each Bitcoin would be worth $913,000.
The opportunity here is to invest in something before everyone else recognizes its value. It’s like buying Amazon, Netflix, or Apple stock in the early 2000s. Nobel-winning economist Paul Krugman famously said in the ’90s that the internet would be a passing fad and wouldn’t contribute meaningfully to GDP. Clearly, that was wrong.
Investments like these are about seeing value before others do. That’s why I recommend putting a small percentage—1 percent, maybe 5 percent if you’re bold—of your portfolio into Bitcoin. If you lose 5 percent of your portfolio, it’s not the end of the world. But if that 5 percent grows tenfold, it could become a significant portion of your portfolio.
Kevin Pho: That makes sense. You’ve touched on how Bitcoin fits into a portfolio and why its Sharpe ratio is attractive. But let’s talk about trust. There were significant losses with platforms like FTX and Voyager. How has that impacted Bitcoin adoption?
Noah Kaufman: That’s a great point. The failures of centralized custodians like FTX and Voyager were devastating. I personally lost over 40 Bitcoin on Voyager. It was painful. Luckily, I’ve rebuilt my holdings, but it was a harsh lesson. These losses made one thing clear: self-custody is essential when it comes to Bitcoin.
Even with platforms like Coinbase, I wouldn’t fully trust them for long-term storage. The mantra in the Bitcoin world is, “Not your keys, not your coins.” If you don’t hold the private keys to your Bitcoin, you don’t truly own it.
That said, while retail adoption has slowed due to these setbacks, institutional adoption has surged. Many retail investors got burned by platforms like Celsius, BlockFi, and FTX, and they’ve been hesitant to come back. It’s a “once bitten, twice shy” situation. However, institutions like Wall Street have been accumulating during this time, taking advantage of the lower prices. Now, Bitcoin is primed for its next big move, and we’re seeing the effects of that.
Kevin Pho: With Bitcoin now surpassing $100,000, some may wonder if it’s too late for physicians to invest. What’s your perspective on that?
Noah Kaufman: It’s definitely not too late. In fact, it’s still very early. Bitcoin follows mathematically defined cycles, which are volatile by nature. You’ll see 30 percent rises followed by 20 percent drops, or 50 percent gains followed by 10 percent pullbacks. It moves in stair-step patterns.
Right now, we’re over $100,000, but it wouldn’t surprise me if Bitcoin dropped to $70,000 in a few weeks. People would then declare, “See? It’s failing; it’s a Ponzi scheme.” But shortly after, it might surge to $180,000. That’s how Bitcoin works. Its supply is extremely inelastic, and its demand keeps growing.
Nation-states are buying it. Institutions are buying it. This dynamic creates an upward pressure on price over time. Sure, there will be corrections, but the long-term trajectory is up.
For physicians, the idea is to allocate a small, speculative percentage of your net worth—1 to 5 percent—to Bitcoin. It’s not about day trading or trying to time the market. Bitcoin is something you buy and hold for the long term. If you buy now and hold for several years, the potential upside is significant.
Kevin Pho: You mentioned earlier that Bitcoin could play a role in private practice or medical group balance sheets. Can you elaborate on that?
Noah Kaufman: Absolutely. I consult with private practices and medical groups on this topic. There are ways to structure investments into Bitcoin legally and strategically. For example, instead of distributing 100 percent of profits as bonuses or reinvesting in traditional ways, practices could allocate a small percentage—say 5 percent—of their funds into Bitcoin.
Holding Bitcoin on the balance sheet offers several benefits. First, there are favorable tax implications depending on how the investment is structured. Second, it diversifies the group’s financial strategy. Even if Bitcoin’s price remains stable, the potential for outsized returns over time makes it a compelling option.
For practices, this is a way to strengthen financial resilience while taking advantage of an emerging asset class. It’s a no-brainer to allocate a small percentage to Bitcoin. Of course, there are legal and accounting considerations, but I help groups navigate those complexities.
Kevin Pho: Shifting gears a bit, let’s talk about how financial freedom impacts the physician lifestyle. You’ve mentioned that financial security has changed how you approach medicine. Can you share more about that?
Noah Kaufman: Sure. When I started practicing medicine 20 years ago, finances weren’t as much of a concern. Physician salaries felt sufficient, and the administrative burden was lower. Today, it’s a different story.
I recently spoke with a couple—a pediatrician and an ophthalmologist—who have $900,000 in student loans at a 7 percent interest rate. That’s crushing. Combine that with rising administrative demands, decreasing reimbursements, and inflation, and many young physicians feel stuck.
Financial stress leads to burnout, compassion fatigue, and physician depression. It’s hard to provide great care when you’re overwhelmed by financial pressures. That’s where financial literacy and tools like Bitcoin come in. They empower physicians to take control of their finances, reduce debt, and find a better work-life balance.
For me, I now practice medicine because I enjoy it, not because I have to. I work five or six days a month and spend the rest of my time rock climbing, riding motorcycles, or just enjoying life. This balance makes me a better physician and a happier person overall.
Kevin Pho: We’re talking to Noah Kaufman, an emergency physician and CEO of Starbot, about the current state of Bitcoin. Noah, as we wrap up, what take-home messages would you like to leave with the KevinMD audience?
Noah Kaufman: The most important thing for physicians to understand is that Bitcoin is like Pascal’s wager. Even if you don’t believe in it and think it’s a Ponzi scheme, it still makes sense to allocate 1 to 5 percent of your portfolio to it. Why? Because the risk is asymmetric.
If Bitcoin fails, you lose a small amount—no big deal. But if it succeeds and reaches $2 million or $3 million per coin, it could dramatically improve your financial situation.
Bitcoin has been de-risked significantly over the past few years. Institutions, nation-states, and pension funds are accumulating it. It’s becoming a mainstream asset. Physicians should consider owning some—not just for financial gain but to combat inflation and secure their financial futures.
Kevin, thank you for having me on again. It’s always a pleasure to share my perspective with your audience.
Kevin Pho: Noah, as always, thank you so much for sharing your insight and perspective. Thanks again for coming back on the show.
Noah Kaufman: Thanks, Kevin.
