This paper discusses the potential for hydrogen storage in carbon nanostructures through a better understanding at the fundamental molecular level. The use of hydrogen as a fuel is limited in large part because of lack of progress in developing suitable storage and delivery systems. Materials that adsorb significant quantities of hydrogen are therefore urgently needed. The special hydrogen adsorbing characteristics of carbon nanomaterials make them rather suited as hydrogen storage devices. Due to their high surface area and capillarity, carbon nanotubes have high hydrogen storage capacity. A background of the hydrogen storage problem with carbon nanotubes is provided and the issues to be resolved have been highlighted. Future directions to address these challenges have also been suggested. We make a case that molecular simulation studies can identify the most promising structures and compositions to maximize hydrogen storage