Australian Finance Barefoot Investor snaps back at embarrassment slight over cryptocurrency advice 

Australian finance guru Barefoot Investor Scott Pape has dismissed his critics after he was branded an ’embarrassment’ over his tips on cryptocurrency.

The risk-averse financial advisor has refused to push new digital cryptocurrencies to his followers despite them making astronomical increases over the last few years.

Now one reader of his newsletter has called him out over it – and earned a feisty rebuke in return.

‘You are costing your followers HUGE gains by sticking your head in the sand with crypto,’ an investor known as Chris wrote in a letter to Mr Pape’s regular email. 

‘Let’s put to one side the 1,000-plus percent gains that have been made on various coins, and focus on income. Who doesn’t want a 17 per cent return from staking coins? 

‘Crypto and DeFi (Decentralised Finance) are the future. The Barefoot Investor is the past,’ the reader wrote. ‘Wake up. You’re embarrassing yourself.’ 

Cryptocurrencies are virtual currencies which only exist in cyberspace but can be ‘mined’ by banks of computers unravelling a complex algorithm. 

The main cryptocurrency, Bitcoin, doubled in value between Christmas last year and October, before slipping back about 20 per cent since then. 

They launched in 2012 with a value of US$4.19 each and were snapped up speculatively by tech fans worldwide.

They are now worth around US$51,000 each, an increase of 100,000 per cent, gifting fortunes on the early adopters, many of whom are now multi-millionaires.

There are now multiple other similar cryptocurrencies, with many also recording massive increases in value in record time.

But Mr Pape still has concerns about investing in the virtual currencies.

Unlike real currencies, cryptocurrencies are not backed up by national banks or governments and subject to massive fluctuations in price for all sorts of reasons. 

Mr Pape snapped back at his critic that he was well aware of the the finance marker being disrupted by the digital markets. 

But he said there was ‘a lot of dumb, greedy stuff that’s going on. And there is a LOT of dumb stuff happening right now.’

He used the example of one cryptocurrency that shares its name with the new Covid variant, Omicron, which ‘skyrocketed 1100 per cent [to $700] last weekend’.

‘Why?’ asked Mr Pape. ‘Because it has the same name. Seriously. It starts and ends right there. 

‘Then Monday came the hangover, and the coin nosedived 75 per cent overnight.’

He insisted the fact that cryptocurrency had high returns was an indication of the dangers involved.

‘For all the amazing technological progress that’s occurring right now, none of it changes the basic tenet of risk and reward,’ he said.

‘In a world of zero percent interest rates, any investment that offers a 17 per cent yield is a red flag that you’re taking on an increased risk that you’ll lose your money.’

He added: ‘I pray for you Chris.’

In the same newsletter, Mr Pape also slapped down another investor who withdrew her super and took out a loan to lend $85,000 to her boyfriend who now can’t afford to pay her back.

‘I’m not going to judge you … as I’m sure you’re already being pretty hard on yourself,’ he wrote. 

‘Okay, I can’t stop myself: I’m dirty that you took money out of your super, Linda. That was for your retirement!’

He advised her to tell her boyfriend to pay back the loyalty she had shown him when she lent him the cash by him taking on extra jobs to pay her back.

Mr Pape added: ‘You helped him out of love because you knew that he’d do the same thing for you. Well, now it’s time for him to prove it.’