In five years, might the Bitcoin market be little more than a smoking ruin?

That's the dystopian future facing crypto-currency traders, if the current pace of attacks against Bitcoin exchanges and holders continues. Both could see a never-ending onslaught of distributed denial-of-service (DDoS), hacking, and malware attacks designed to drain their virtual currency coffers.

But the possibility that Bitcoin might burn is good news for anyone who cares about crypto currencies, as well as the future of our monetary system. In other words, just because one cryptographic currency gets pummeled, the odds are that the next "Satoshi Nakamoto" will build an even better one.

Beyond Bitcoin, which has the world's largest virtual currency market capitalization (nearly $8 billion), there are at least 100 other crypto currencies, ranging from Ripple ($1.4 billion) and Litecoin ($453 million) -- also at the high end -- to Deutsche eMark ($106,000) and Grumpycoin ($88,000) at the low end. Even criminals have begun to diversify into homemade crypto currencies, because they see Bitcoins as being too volatile for storing their ill-gotten gains. Meanwhile, a Lakota Indian named Payu Harris is even promoting a new crypto currency called Mazacoin, which he hopes will provide the Lakota nation with greater independence.

[Can new regulations be a good thing? See Snowden, Bitcoin, Data Breaches Foretell New Regulations.]

When it comes to the prospect of nations minting virtual money, Harris might be on to something. According to former Central Intelligence Agency CTO Gus Hunt, in the future, the dollar could well become a crypto currency. "Government's going to learn from Bitcoin, and all the official government currencies are going to become crypto currencies themselves," he said during a recent panel discussion in San Francisco hosted by information security firm eSentire, for which he sits on the board of advisers.

Eventually, however, Bitcoin itself may be supplanted. "I believe that Bitcoin is going to go the way of Napster: it ended up being a commercially viable idea that infringed upon very, very well-financed [music industry] organizations," said G. Mark Hardy, president of National Security Corporation, speaking at the same panel discussion as Hunt. "[That industry] did rent-seeking, they went to Washington, they got the DMCA [Digital Millennium Copyright Act], and a couple of other pieces of legal action to go ahead and smack down Napster, but then [resurrected] it as a profit-oriented thing called iTunes, which generates billions in revenue for Apple," Hardy said.

Image credit: zcopley on Flickr.

From an evolutionary standpoint, what crypto currencies can offer us, as well as how they must be improved to become safer to use, is being highlighted via people's embrace of Bitcoin. "The concept is great, [but] the execution has a couple of things -- the deflationary currency, there's no central bank to be able to regulate the amount of coins that are in there... that would be good to have in there," Hardy said. "As a result... my recommendation -- and this was back when [a] bitcoin was [worth] about 900 bucks -- was to sell-sell-sell because you're going to get the chance to buy-buy-buy something else that's going to offer stability. Right now, you're playing a casino game."

Accordingly, anyone who focuses on Bitcoin as the bellwether for the crypto-currency concept's success is ignoring how business uses of technology typically evolve. "All you've cited is the myth of the first-mover advantage, right?" said Hunt, the former CTO of the CIA. "The real advantage goes to the second-mover: AltaVista, Google; Napster, iTunes."

To use a medical analogy, battlefields -- whether during the Civil War, Vietnam War, or the recent wars in Iraq and Afghanistan -- typically produce major advances in emergency medicine and trauma surgery, because the quantity of casualties leads to new innovations. Might not the same be true for Bitcoin and future crypto-currency systems?

"I didn't realize Bitcoin is a land war in Asia," said Dan Kaminsky, chief scientist of White Ops, in response to that question. The expert penetration tester spent four months trying and -- surprisingly, he said -- failing to find exploitable weaknesses in the Bitcoin protocol.

While Kaminsky is neutral on Bitcoin itself, on the innovation front, he said, it's "fascinating technology that can inform a lot of future development," for 

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