On a giant flat-screen TV in an old Emeryville, California warehouse, a floating orb fires red, blue, pink, and yellow beams into a honeycomb of hexagonal blocks. The blocks are black, white, and gray, but as the beams hit them, they change—flashing, fading, absorbing color. And when they do, scores tally just above.

On the same screen, from adjacent windows, three commentators provide additional color, as if this was a videogame championship. "You can see who's being owned, and who's doing the owning," says one, a theoretical physicist named Hakeem Oluseyi.

But this isn't a videogame. The other two commentators are veteran white-hat hackers, experts at reverse-engineering software in search of security holes. The slick-bald guy (with the ponytail in back) is Visi, and the thin one with the hipster beard is HJ, short for Hawaii John. No other names given. They're hackers.

All this is dress rehearsal for a $55 million hacking contest put on by Darpa, the visionary research wing of the US Defense Department. The contest is called the Cyber Grand Challenge, and it's set for early August. Seven teams will compete inside seven supercomputers erected in a ballroom at the Paris hotel in Las Vegas, each unleashing artificially intelligent software that will defend one machine—and virtually attack the rest.