I've been battling with this thought for some time now and I'd like to be enlightened. What exactly causes terrorism and how? Is it illiteracy, poverty, frustration, attention, religion or a mix of two or more of these factors?

Ignorance, fear and psychosis mainly cause terrorist behaviors.

Threat to life, property or freedom and many more.
Real or imagined.

For example, gay people are terrorized.
Pro-choicers are terrorized.
Blacks are terrorized.
Women and children are terrorized.

There is also cyber terrorism even for people you do not know and have never met.

Religion is a tool that can be used to unleash terror.

too much wankin'

I'd say religion is the most fundamental factor