You can always use Bitcoin anonymously, but you can never verify Monero.
Discussion
How can you do that if even Chainalisys can take a look at who's using BTC anonymously?
Buy without KYC, use without KYC
But you cant ever transact on Bitcoin privately. Different thing entirely from anonymity (technically Bitcoin is not even anonymous, but pseudonymous)
When they update bitcoin with silent payments it might work
Silent payments are only for recipient privacy and it is more like obfuscation. Definitely an improvement, but doesn't help sender or amount privacy.
It doesn't work as well on a transparent chain. Counter party can still easily figure what address it went to. Even third parties can figure it out if they know 2 of 3: time of transaction, amount, or sender address
Still might work eventually. The end state would be the same as Monero - some people have their security compromised, but most people cannot be tracked down via their transactions and most people's money cannot all be tracked down without their keys. The IRS loses the ability to just freely track everything at once in one big comprehensive view.
If you use pseudonymity correctly, it is effectively anonymity
Putting aside that important caveat ("IF you use pseudonymous correctly" - most users can't) anonymity is not privacy. It's a transparent blockchain.
I think that it is possible to have solutions on layer 1 which make it much more convenient to use pseudonymity correctly. It's also possible to get much better privacy and less transparency on layer 2+.
None of your criticisms appear severe enough to sacrifice the money part of money. For all you know monero could lose 1/3 of its value over the coming year due to obfuscated insider action or some glitch.
"It's also possible to get much better privacy and less transparency on layer 2+"
Agree, which is why an L2 on an encrypted base would be ideal for private and anonymous transactions. FCMP enables that.
"None of your criticisms appear severe enough to sacrifice the money part of money."
Fungibility is also a money part of money. A transparent crypto introduces more friction to that being an MoE even if you have an L2 on top.