Google Director of Ideas and former technology advisor to former Secretary of State Hillary Clinton, Jared Cohen, says that digital “crypto-currencies” like Bitcoin are here to stay. “I think it’s very obvious to all of us that crypto-currencies are inevitable,” he told the audience at SXSW, in conversation with Chairman Eric Schmidt, to promote their co-authored book, The New Digital Age.

The most popular digital currency, Bitcoin, has caused media and political firestorm for its wild swings in value, strong support from the libertarian hacker community, and association with the black market. “There’s lots of value to it,” he argues, but “there’s a danger to it not being regulated.”

Google Ideas is the search giant’s residential think tank that deals with governments, especially oppressive regimes. Bitcoin’s reputation has suffered from recent mass thefts, leading some critics to declare “Bitcoin is dead.”

If Google’s own lead on these types of issues believes that the inevitability of cryptocurrency is “obvious”, it’s a resounding validation of the beleaguered technology.

Now, Bitcoin itself may not last.”Is Bitcoin the model, or the master of crypto-currencies?” Cohen questioned.

Anyone can create an anonymous completely digital currency. Like all currencies, Bitcoin just depends on two parties having confidence in the exchange value. Indeed, just this week, another technology blog, Ars Technica, decided to create one of their own, lovingly called “arscoin“.

Cohen says the long term threat to digital currencies is safe storage. Certainly the theft of $400 million worth of Bitcoin from popular exchange service, Mt.Gox, shook the industry. But, even with that embarrassment, Bitcoin is still retaining value.

The controversy has reached congress. Some members are calling for heavy regulation to curb the impact on susceptible consumers. In response, Congressman Jared Polis made headlines for cheekily calling for a ban on the U.S. dollar, with a clever letter comparing the frailty of the U.S. dollar to Bitcoin.

But, if Google’s forecasting gives you confidence, then Bitcoin–and all its craziness–is here to stay.