>why is it only used

Sixel has existed for 40y, Kitty protocol originated and initially made for a single project (Kitty) few years ago.

>why we have 2 competing protocols

Well, iTerm2 also got its own image protocol (predating Kitty's but basic, only meant to show images rather graphics in general) that has been adopted by few other projects. Terminology also got something on its own, and urxvt can show images by setting the background image.