Because it is safer and more reliable than banknotes
Safer? no! in part, it is a means of money-laundering and a product of corruption for many. In order for bitcoin to become an official banknote, you need to work hard. But nobody in the government wants that.
I think bitcoin is safer. Bitcoin can be used for illegal purposes. You are right. But the transparency of bitcoin transactions can remove many corruptions.
There are some problems with bitcoin, But I think they are less compared to Fiat.