It breaks the link between your spend of fiat and your acquisition of Bitcoin. If someone tried really hard, maybe they could find the blockchain transaction (unless it occurred over Lightning, like with RoboSats), and assume a correlation to some p2p send of dollars. But unless you’ve gotten someone’s attention for some serious reason — or live in an extreme authoritarian environment — this is a very unlikely scenario.

You can pay someone via any fiat method though, if that’s a concern. Venmo, Zelle, cash-in-person, etc.

More important in most cases is that there isn’t a centralized, hackable, capture-able company who knows exactly how much Bitcoin you own and what those utxo’s are. Because *that* link is where your financial privacy is easily violated. It’s not about keeping everything perfectly secret, for most of us. Just reducing the risk of personal data leaks when these exchanges inevitably get hacked. No need to tie your home address to your Bitcoin holdings…