"Perhaps the initial demand for something like USD was due to legal effects like tax codes and bankruptcy laws, but I would think the primary demand today is network-effects"
Those network effects start somewhere, in the present; otherwise, it would be hard to explain why US dollars are hard to spend in Canada, Europe, and other countries. The answer is that in Canada, the Canadian dollar can legally cancel debts; in Europe, Euros and the remaining national currencies do it; other countries have their own currencies, or adopt the currencies of more powerful nations like the United States.
Laws about money remain the driving force of the demand for money. Failure to pay taxes is a serious crime; the US government only accepts US dollars for tax purposes. Failure to repay a private loan can result in your property being given to the lender -- and you could be arrested for trying to keep that property (formerly yours). These are legal matters that affect our daily lives, even if we do not actively think about them, and the demand for US dollars in the US, Canadian dollars in Canada, and Euros in Europe follows. If you want to be a law-abiding citizen or business in the US, you must get your hands on enough US money to at least pay your taxes; even if you participate in a barter exchange, the law requires you to pay taxes on that trade. Even if your plan is to live off the land, you will still have to pay Uncle Sam at some point: hunting and trapping fees, fishing fees, fees for felling trees, etc. Other countries have similar fees and taxes, except that the requirements are for a different currency. Network effects are secondary: People know there is demand for US dollars in the US and in a few other countries, and so they may deal in US dollars even if they have no debts in US, much like a shopkeeper will buy and sell goods he may not have personal use for.
"I think it's hard to say that Bitcoin's demand principally comes from technical features (without proof)."
Can you point to any other sources of demand? There are no laws about Bitcoin; if you issue a Bitcoin loan to me and I fail to repay it, what are you going to do? Even if you took me to court, the first thing the judge would do is to convert whatever Bitcoin amount you name to the currency of your country. No country will accept Bitcoin for tax purposes. Those reasons alone are enough to conclude that without Bitcoin exchanges, Bitcoin would probably not survive at all -- merchants will only accept Bitcoin because they are aware of a way to trade Bitcoin for their country's currency (and the lack of stability in the exchange rate really puts a damper on that). Even people who use Bitcoin for black market transactions rely on the existence of Bitcoin exchanges.
There is no denying that there is demand for Bitcoin's technical features. People want a way to make secure, peer-to-peer online payments, and they are not satisfied with solutions that rely on trusted third parties. It seems that all other demand for Bitcoin stems from this; speculators are basing their Bitcoin investments on the belief that there is some real demand for Bitcoin and that the Bitcoin market will grow, but were there no demand for Bitcoin those speculators would not be in business (speculation does not create a market). The low transactions fees for international exchange are a product of lacking third parties, and I would classify that as a technical feature of any digital cash system.
Those network effects start somewhere, in the present; otherwise, it would be hard to explain why US dollars are hard to spend in Canada, Europe, and other countries. The answer is that in Canada, the Canadian dollar can legally cancel debts; in Europe, Euros and the remaining national currencies do it; other countries have their own currencies, or adopt the currencies of more powerful nations like the United States.
Laws about money remain the driving force of the demand for money. Failure to pay taxes is a serious crime; the US government only accepts US dollars for tax purposes. Failure to repay a private loan can result in your property being given to the lender -- and you could be arrested for trying to keep that property (formerly yours). These are legal matters that affect our daily lives, even if we do not actively think about them, and the demand for US dollars in the US, Canadian dollars in Canada, and Euros in Europe follows. If you want to be a law-abiding citizen or business in the US, you must get your hands on enough US money to at least pay your taxes; even if you participate in a barter exchange, the law requires you to pay taxes on that trade. Even if your plan is to live off the land, you will still have to pay Uncle Sam at some point: hunting and trapping fees, fishing fees, fees for felling trees, etc. Other countries have similar fees and taxes, except that the requirements are for a different currency. Network effects are secondary: People know there is demand for US dollars in the US and in a few other countries, and so they may deal in US dollars even if they have no debts in US, much like a shopkeeper will buy and sell goods he may not have personal use for.
"I think it's hard to say that Bitcoin's demand principally comes from technical features (without proof)."
Can you point to any other sources of demand? There are no laws about Bitcoin; if you issue a Bitcoin loan to me and I fail to repay it, what are you going to do? Even if you took me to court, the first thing the judge would do is to convert whatever Bitcoin amount you name to the currency of your country. No country will accept Bitcoin for tax purposes. Those reasons alone are enough to conclude that without Bitcoin exchanges, Bitcoin would probably not survive at all -- merchants will only accept Bitcoin because they are aware of a way to trade Bitcoin for their country's currency (and the lack of stability in the exchange rate really puts a damper on that). Even people who use Bitcoin for black market transactions rely on the existence of Bitcoin exchanges.
There is no denying that there is demand for Bitcoin's technical features. People want a way to make secure, peer-to-peer online payments, and they are not satisfied with solutions that rely on trusted third parties. It seems that all other demand for Bitcoin stems from this; speculators are basing their Bitcoin investments on the belief that there is some real demand for Bitcoin and that the Bitcoin market will grow, but were there no demand for Bitcoin those speculators would not be in business (speculation does not create a market). The low transactions fees for international exchange are a product of lacking third parties, and I would classify that as a technical feature of any digital cash system.