Layer 1 privacy concepts that could / do work in Bitcoin:- CoinJoin (Greg Maxwell): combine transactions to hide who pays whom - usable today
- CoinSwap (Greg Maxwell): swap coins with someone else to get new transaction history - usable today
Do these two can be classified as part of layer 1 privacy since it doesn't require change on layer 1 protocol?
The biggest downsides of privacy tech like ZCash and Monero is that they hugely hurt scalability, not just by having much larger transactions, but also by making it impossible to identify the UTXO set.
Also due to longer block/transaction verification time.