"There's a danger in having it not be regulated in some form, but people will take it and debate that as this plays out," he said.

"There are two questions that are important to ask. One is, what is the future of crypto-currency? And it's very obvious to all of us that crypto-currency is inevitable," said Jared Cohen, director of Google Ideas at a panel at SXSWi on Friday.

Tech executives and industry professional at South by Southwest Interactive are steadfast in the belief that virtual currency is here to stay.

The other question? Whether other crypto-currencies will be modeled after bitcoin, or full an as-yet-unknown model.



"Is it going to be like the Napster of crypto-currencies? I think that we don't know. This is still a pretty new space," he said.



Bitcoin feels more volatile right now because people are still trying to wrap their heads around the fact that it's bits and not paper, said Nico Sell, the CEO of the messaging app Wickr. But that mentality won't last forever, she added.



"The spikes are amazing right now, but bitcoin is one many virtual currencies. These currencies are 100 percent the future, but we are in the beginning of figuring this all out, but crypto currency is stronger than paper, but we are early on in the process," Sell said. "I'm sure paper didn't work so well in the beginning either."



(Read more: Bitcoin pits the gold bugs vs the 'techno geeks')

It's too soon to whether Bitcoin will be the virtual currency that goes mainstream, she said. Other players are certain to challenge it.



"Bitcoin is definitely number one in the space, but it's such a volatile market that it's really about survival and who can survive this," Sell said.

"I think it's a wide open area that we are going to see tons of innovation over the next ten years. And it's hard to say right now who will shake out on top," she said.

—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.

