1) It would take a subtle and overlooked catastrophic technical flaw in Bitcoin to have it fail from a technical perspective. Even the Android random number generator flaw which created insecure private keys only resulted in a small theft of ~ $5K. It would take some critical flaw that was overlooked for weeks or months whereby balances were stolen from massive numbers of addresses and couldn't be undone for a technical failure.
In this case, it would be fixed and rebooted as Bitcoin2.0 - maybe this would be a chance for NXT, Monero or Ethereum to take off.
2) On a more realistic, although I believe unlikely basis Bitcoin could fail because it stays small, niche and avoided by the general public. It basically becomes Linux on the desktop - aka,






