BTC can't fail though, the truth is on MY side. The day you show me the news story that SHA-256 Encryption has been cracked is the day that "bitcoin fails". And even then the network can easily be upgraded to an even higher standard if that were ever to happen.
There are many ways bitcoin can fail, or at least be so crippled to be essentially considered a failure.
1. The major exchanges pretend to be banks, and governments crack down through anti money laundering and tax laws. Has Mt Gox and Tradehill got the funds to fight drawn out legal cases, and can they exist without the support of banks?
2. The value of bitcoins keeps falling. Speculators who got burned and miners write off bitcoin as another get rich quick scheme that failed.
3. Bitcoin fails to find a real use. There's Silk Road, and not much else. A currency that swings 10%+ on a daily basis isn't much good for use as a currency.
4. Bitcoin fails to get mass mind share. People simply don't 'understand' it and fail to adopt it. It remains the current niche player.
5. Something better comes along. Maybe a system where confirmations don't take hours. Bitcoin wouldn't scale if we suddenly threw a million transactions a day at it.
6. 50% attack. If I was rich and powerful and didn't want to see Bitcoin succeed, I would buy up enough GPU power to gain 50% hashing capability and deny transactions for long enough to make others give up. This scenario is unlikely, as the rich and powerful just don't care about bitcoin. Maybe a hacker with a botnet could do it for lulz.
Collisions being found in SHA-256 would be the most unlikely failure scenario.