Cryptocurrencies rest on blockchain, which in turn rests on the mantra "don't trust, verify." However cryptocurrency value require a blind faith that rivals any religion. Cryptocurrencies have value only if one believes they will be widely accepted in exchange for goods and services in the future.
Who are the disciples of the cryptocurrency faith? Four groups stand out. There are those who have lost faith in their local cash, either because they fear capital controls or because of past hyperinflation. This group has most to lose when the bubble bursts.
Speculators may not have faith in cryptocurrencies. They have faith that they can convert into cash before the bubble bursts. Digital anarchists, who believe technology can render government obsolete, are enthusiastic acolytes of cryptocurrencies. Their belief seems to have risen in proportion with government regulation of technology.
The final group are those engaged in crime. Anti-money laundering, regulation and declining global capital flows may have reduced cash supply to the illegal economy. When cash is constrained, people will adopt parallel currencies. What was true in the silver shortage of medieval Europe is true in the illegal economy today. This may be an enduring source of demand for cryptocurrencies.