That does add some value but it’s fairly weak - people can always choose to switch to something cheaper, capping the maximum - and it adds its own risks: price spikes might leave you unable to perform transactions within your budget.

No, people cannot always. Sometimes, often maybe, yes.

Network effect, security, are some of the reasons.

Yes, people can always switch. Unlike a sovereign currency nobody has a legal obligation to use any cryptocurrency, which means everyone is going to assess whether they’d be getting better value using something else.