Because the cursor just works.
When a user is typing, he or she needs an indication as to where the next letter or character will display. The cursor does a fantastic job of providing that "system status" with a visual indicator that is NOT a character that is commonly used by the majority of users (the pipe: | ) It does a great job whether you are typing in sequence or have to "reset" the position of your typing to add or edit text.
Since no one has come up with a better UI element over the past several decades of interface design, the cursor "stuck." And why would anyone want to change it, when everyone has grown up having learned and used the cursor? You might as well redesign the mouse pointer (which is also a UI convention that just works and "everyone" knows).