For normal currency, its easy to answer, you use whatever the merchants accept. If you buy things from stores and it accept.Bitcoin is one of the very good choices here as its digital currency. You can store your bitcoin even on a piece of paper or use physical wallet. Some rich people who would like to hide some part of their wealth from bank/security accounts.Bitcoin permit them to pay others easier than bank transfer and credit cards for transactions.
Yes fiat currency has a wider acceptance than digital currency and that's why fiat most of the people prefer to keep fiat for day to day needs and expenses other than that I don't agree that cash is better than bitcoin. Once bitcoin acquires as much acceptance as fiat people will prefer bitcoin over cash.