The original design was for transactions to remain pseudonymous from end to end, and the public records remained as such until you cash-out. It is here that we lost the pro-privacy gift of the blockchain.
The moment you cash-out your bitcoin to a bank or an exchange or to any other means that requires a real world identity, pseudonymity is lost. Satoshi's rally for privacy goes down the drain. Your identity is uncovered. They can already trace your bitcoin wallet address and all other wallet addresses you transacted with.
The effort of pseudonymity is lost. But is there really a way out? Can we really remain pseudonymous to continue the blockchain's rally for privacy?
You are absolutely correct! But do we have a wayout? Can we really use bitcoin or any other crypto for our daily expenses like buying groceries or buying fuel for vehicle etc.? The answer is NO and that is the reason why we have no other options than to give away the pseudo-anonymity to make our bitcoins useful. Have we had the choice of using bitcoins for our daily expenses, we would have loved to retain that! We are giving this away because we don't have any options available!
There is only one way out as I see it! We need more merchants to adopt bitcoin as a payment option. When I say merchants, I do not mean Expedia or Starbucks because they are not merchants who sells daily products like groceries and domestic goods. unless and until we see merchants accepting cryptos as a payment option, we are forced to give away our identity because we have no other options than to exchange it to our local currency before we can use it.
At this point of time, adoption is very much important to see bitcoin to grow to the next level. HODL and trading is all right but the growth will only be fueled if we can use bitcoin as a currency in our daily lives. Otherwise, all will go down in drain if it continues to remain as an investor's asset.