In response to this article:http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea
Severe Problem Number 4: When Something Goes Wrong, It Will Die
Let's suppose there was a catastrophic failure of the Bitcoin network. This could be someone figuring out how to add a large number of coins or bogus transactions. What would happen?
Let me first say that from what I know of the system this is just not possible. Suspend your disbelief for a moment, though, and consider the consequences if this were to happen.
I'm going to go out on a limb and say that everyone using Bitcoins is watching very closely how the Bitcoin saga unfolds. Exchanges would immediately stop trading and merchants would no longer accept Bitcoins. Technically, they could not stop transactions, but they just wouldn't ship product. Pool operators would stop mining. Message boards would light up and the whole system grinds to a halt. Again, technically, transactions and mining would continue, but non-virtual products would stop shipping.
Coders all over the internet go through the code and figure out what happened and how to fix it. The fix would include a way to roll back transactions to the point of failure. Miners would need to be updated to a new version and then mining would continue with updated code. Under the covers the bogus chain continues to grow, but big players would update to a new version that would only work with the new branch. Technically, the Bitcoin network would survive the failure.
You might think that it would be impossible to change the Bitcoin software, but consider the alternative.
The economic impact would depend on many factors, but that's a discussion for another time.