Fungiblity is interchangeablity, which is different from being perfectly identical, which is also different than being perfectly private.
I understand the block is transparent.
Quite simply, those privacy issues are solved on other layers.
TCP/IP isn’t stupid because there isn’t a VPN integrated into it. The VPN just sits ontop.
General compute proof of work is a huge security risk.
Privacy on the base layer of money puts cart before the horse.