There is never just one reason for an asset class to lose favor with investors. It takes a convergence of factors to break the proverbial camel's back finally. In the case of Cryptocurrencies, we may just be approaching that tipping point as investors start to see clear warning signs to rethink their initial enthusiasm for the likes of Bitcoin, Ethereum, Litecoin, Ripple and at least 1,500 others at last count.

In the wake of the 2008-2009 financial collapse and subsequent rounds of quantitative easing, cryptocurrencies emerged as a logical alternative to fiat money and a means of storing value "outside the system." Many early adopters were libertarian types seeking transaction privacy free from government oversight, the convenience of use anywhere in the world and security.

However, it is becoming obvious to the objective observer that most cryptocurrencies offer none of those advantages.

As Bitcoin's recent drop from $20,000 to $6,000 has shown, the high volatility of cryptocurrencies disqualifies them from being a reliable store of value. Cryptocurrencies are poorly regulated and are at best only "pseudo-anonymous," as Bitcoin expert Andreas Antonopoulos (author of "Mastering Bitcoin") points out; furthermore, cryptocurrencies are notoriously impractical to use and are not as secure as once thought.

Hacking and theft of cryptocurrencies

Hackers can gain access to a user's Bitcoin wallet by stealing the private cryptographic key (or blockchain password) which is done by hacking the databases of private key storage providers.

Alternatively, hackers can divert Bitcoins to their own wallets by using malware to access mining pools and exchanges. Other forms of theft include scams such as fake ICO's, malicious crypto-trading apps, pump & dump schemes, and phishing (particularly effective on mobile phones).

Government surveillance of cryptocurrencies

The NSA (National Security Agency) uses two forms of surveillance on cryptocurrencies: bulk monitoring of emails and lifting of data directly from fiber optics cables.

By deploying sham Internet anonymity services such as Monkeyrocket, the NSA is able to collect users' passwords and their unique ID number known as a MAC address. It is important to note that the NSA cyber-security task force has for several years been merged with military hacker force US Cyber Command.

Other government agencies such as the US Department of Justice, the IRS (Internal Revenue Service) and DHS (Department of Homeland Security) are also involved in monitoring cryptocurrency exchanges and private users worldwide.

One example of a coordinated effort by these three agencies is the surveillance and infiltration of Costa Rica-based Liberty Reserve Coin that resulted in the seizure of assets and arrest of its founder Arthur Budovsky.

Investors become wary of cryptocurrencies

In conclusion, the illegal surveillance of cryptocurrency users in the name of national security as well as hacker attacks, extreme volatility and the inherent impracticality of decentralized blockchain transactions are among the factors that have caused an increasing number of investors to wonder whether these digital assets are really worth the risk and hassle.