Actually, Bitcoin is being traced, that is why centralized exchange wanting KYC, and that is the reason ant blockchain analysis companies exist. Bitcoin natures are a pseudonym. Right now, we need to put some extra effort to gain full privacy and anonymous using currency. At least, until the technologies somehow 'significantly improved'.

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In other hands, I'd agree with @mjglqw and @squatter, Thanks to decentralized and open sources nature of Bitcoin, the network and the system can't be manipulated with any centralized entities, but it comes to other problems, we are as a community would definitely lag behind if the adoption process is being slowed down and prohibited by government.