But even if, say, you paid an employee and this employee see the sender's address and the transactions, he still wouldn't know what these transactions are for.
What's stopping someone from offering to buy lunch for someone at the office? All it would take is one meal. Say the person gives a receiving address, and now they can see the other person's transactions. Then from their own personal paychecks, they can cross reference the transactions rather easily and discover their income if people aren't using multiple addresses .. and just look for two transactions that are the same. Civility goes a long way, and in this case it can be used to discover private financial information about someone that just wanted a big-mac and fries. Again, steps can be taken to avoid this - but not everyone does this. How many people use their facebook login info on tens/hundreds of websites? They're not gonna do the work to stay private - because it involves potentially lots of work, and it needs to be done on a protocol level else it opens them to abuse.
Why would you be worried about anyone knowing where you are? Ordinary people wouldn't know who's behind an IP. I think only governments could threaten an ISP to give out your info. So that means you're hiding you're location against the government?
Incorrect, you're detracting from the argument. I will make the point that giving your ISP access to infinitely valuable, and potentially unencrypted, information that they don't have access to right now is a scenario for disaster. Right now, they don't stand to benefit nearly as much if they were to reveal this information, nor do they deal with the costs of keeping it private. If this information were to become incredibly valuable (which it would, because it would be financial transaction data) .. in that you're now not acting through a bank an instead directly with your transactor through an ISP .. multiple layers of obfuscation are now removed. I'm making the claim that if your ISP were to have access to your transaction records, rather than a bank, you (and them) will be in a terrible situation and as such the cost of having an ISP in the first place would scale infinitely in trying to secure that information, or worse possibly sell that information. An ISP is not a bank, and I could not imagine a scenario where I would treat them as such.