Customers don't want to put themselves at risk either. Most illegal activity is rapidly switching to monero as people learn that Bitcoin is easily traceable unless people take confusing and expensive countermeasures. It's not difficult to swap between different cryptocurrencies and there are major exchanges in almost all countries to directly get monero anyway
The problem of turning money to and from monero still seems to exist though. That point where I want to take some of that monero and turn it into cash to buy tangible illegal things nearby and that other point where I want to take some illegal cash and turn it into moneros. At that point, that money needs to pass through a system that records its existence.
With cash, that money can change hands hundreds of times without it ever being tracked by anyone.
The only way a digital currency can ever be safely used for illegal activities if if it can be used and acquired as freely, easily and as anonymously as cash.
From what i've seen there's no digital equivalent to 'handing someone a suitcase full of cash in a dark alley' or receiving your 'cheque' at the end of the day as a wad of cash in an envelope.
With that cash, I can immediately turn around and spend it on some illegal shit and no record any where will ever exist of me being paid or having purchased illegal things. I can then go and spend that money just as easily in a store, where again, no records of where that money came from exists. It'll just appear(or reappear most likely) in circulation magically when the store records it as profit.
Creating a digital currency like this that actually functions as a currency seems unfeasible. Cash only works as it does because everybody just kind of agrees it does or because the government says it does I suppose.
As an addendum and disclaimer, I wrote a lot of this from a first person point of view, that was for dramatic descriptive purposes only and not from any actual personal perspective or activities.
Monero works like that just fine. You just have to actually use it for everything, rather than convert into physical cash. Just get your provider of tangible things to accept Monero.
If you really need cash, you can also just (physically) go to someone who has cash and tell them "I'll transfer you some Monero coins if you give me some cash and don't record that you did".
Ok so, for a more tangible example, I hand Buddy several pounds of drugs, Buddy hands me cash, I can walk to the store immediately and use said money to acquire things. Likewise, I could turn around, go talk to other Buddy and buy more drugs, all within 5-10 minutes of receiving said handful of cash.
Until a digital currency allows this with the same level of anonyminity and ease, it's not viable as a replacement to cash. Go betweens and other things will still involve some third party to facilitate the conversion to real currency. That's the problem. This digital currency must be equally as legitimately and illegitimately useful immediately upon receipt with no hassle with any and all transactions directly doable in said currency without the need for any third party involvement or recording.
Barely anyone understands this technology well, and so they listen to celebrity Bitcoiners that have a vested interest. It's also difficult to find the one good alternative project among is a sea of well-funded scams. Marketing is important. Real usage is also a niche activity compared to speculation at this stage
This is a good thing. We don't want Monero to get too popular just yet. Let the people who really need privacy find it while the politicians are still fixated on Bitcoin.