Don't fall for this bitcoin-rival investment scam

Your money will disappear into the dark internet.

The most successful scams are normally those 'investments' about which the potential victim knows a little, but not too much. That way, you can keep it simple, and ensure the future loser is too embarrassed to admit to knowing very little.

The most successful racket of the past decade was landbanking – everyone thinks they know about property and how a farmer's field would be worth far more if it could be sold for housing. The con is convincing them of the “planning permission in the pipeline” lie.

The latest boiler room to phone wants to take advantage of the bitcoin phenomenon. Most of their target audience – people at home with some savings – will have heard of it. Probably like me, they know that this is an alternative currency only available online; that its value fluctuates a lot; there are apparently fortunes to be made and lost; and that it was invented to fund drug deals and other activities on the secretive dark internet.

But I didn't known that bitcoin is just one of dozens of 'crypto-currencies' such as blackcoin, darkcoin, litecoin, and mastercoin. 

I now know these currencies exist, thanks to a call from Adrian. With the familiar boiler room buzz in the background, he asked me if I had of bitcoin or considered investing in it.

He told me what a great deal it was. He claimed that there were 75,000 transactions a day using bitcoin, that it was a $10billion a day market, and that this “financial tour de force” was supported by Richard Branson (he says he will accept the currency for his space travel programme although I don't think it would be accepted on Virgin Trains) and by Microsoft's Bill Gates. In fact, Gates is largely anti-bitcoin.

Boiler room operatives need to show how easy it is to make money. Apparently had I invested $26 in bitcoins in 2009, I would now be worth $5.8billion. 

But Adrian does not want me to invest in bitcoins. “It's not the only one, but it's all most people have heard of. There are many others with special purposes such as financing deals in China.” 

He continued: “Those in the know will invest in others such as blackcoin and feathercoin. Over just three months last spring, blackcoin turned $100 into $38,000. This is a real game changer for investors who are fed up with low returns.”

Blackcoin calls itself “the currency of the future” although its official website was last updated in mid-December. It claims it is free from central authorities and banks, and "gives the power back to the people". That also means it (and other crypto-currencies) are outside regulation. And we've all heard of bitcoin owners losing out because they've lost the password for their online wallet.

Adrian asked me about my current investment portfolio – a standard boiler room tactic – and what I was comfortable with. He cited equities, utilities and commodities. That's hardly the whole asset range, but probably stuff he was selling at his previous high pressure home.

He then promised to email me more details. It went into the spam folder, but it told me that Adrian worked for a company that is “an alternatives based introducing agent with access to a variety of products and services via our exclusive international relationships that we can bring to market and offer directly to you”.

The small print comes with a massive disclaimer: “The products promoted and offered are not designated investments for the purposes of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and as such are not subject to regulation by the Financial Conduct Authority.”

There was also a glossy brochure full of claims of expertise and technical ability. The “marketing company” has one director, aged 25. The coin company, which was set up on Christmas Eve, has one director who is a more mature 32. Neither firm's website can be found via a standard search engine. So that's pretty dark.

It looks like a way of turning real money into cyber-nothingness.