As with all things privacy related. People are happy to let Amazon and Google record every single word that is spoken inside their house, provided it means they can play a song without having to press like 3 buttons on their phone. They will of course be happy to transition away from cash if it means some 1% reward on their spending.

People have always been happy to trade their privacy for the slightest convenience. This is why we need both education as well as privacy enforcement at the protocol level.

Which everyone seems to understand without a second though when it comes to fiat, but for some reason when it comes to bitcoin people start defending the ridiculous privacy invasion and stealing of coins which is practiced by centralized exchanges. I've never understood why, other than they just mindlessly by in to the government propaganda without question.

This scenario did happen during the pandemic, and I'm sure this tyrannic behavior is here to stay, globally.

In my country, certain employees of the private and public sector were forced to do the vaccine[1] and reveal the corresponded certificate whenever they entered a closed room. Later, it was compulsory to do the same for open places, like cafeterias. Then, the elders were given the choices to either do the vaccine or pay a €100 fine for each month they weren't "prudent".

I presume next up is repealing of cash, introduction of social credit score, reduction of non-green energy usage, transition from actual reality to virtual reality etc., all of which happen at the expense of our liberty.

[1] https://www.kodiko.gr/nomothesia/document/737234/nomos-4820-2021 (Law 4820/2021)

I mean, in the West already all your movements are tracked by the handy GPS device that 99% of the population carry with them at all times, and all your purchases are tracked through your debit/credit cards, online accounts, store cards, and so on. But as above, people get some tiny convenience and so are willing to pay the price.

Perhaps they think that by simping for the government then the government might leave them alone.

Yeah I know, but you can still opt-out for some things, you can use dumb phone, or install graphene os in android phone, and you can still use cash in many places.
Things in China are next level craziness, and there is no way you can opt-out or even escape their country if you don't like this changes.
Lot of Chinese people escaped to Vietnam and from there to other countries, but now they put extra guards and massive barb wires or borders like in concentration camps.
Not to mention that Bitcoin is fully banned in only few countries in the world and China is one of them, you can still use it but be ready to go in jail if they catch you.
So almost everything is ''tainted'' in China because their government say so.  

That won't work: there's no way to know who owns an unused Bitcoin address. And I don't think this is a feature that belongs in a wallet: a wallet should do what I tell it to do, without complaining.

Agreed. As attractive as it might seem at first to "blacklist the blacklisters", then you just run in to the exact same problem again: Who determines what should go on our "good" blacklist? We simply loop full circle and end up back at square one, with a centralized entity deciding where we can and cannot send our coins. Just because it is a centralized entity we happen to agree with (for now!) is irrelevant. Giving anyone or any entity the power to enforce a blacklist is against the ethos of decentralization and self ownership.

The way to do this is to just stop using them. As I've said before, if every single customer of Coinbase withdrew all their funds tomorrow and stopped using their platform in a mass protest against taint, Coinbase would have changed their rules by tomorrow and would be lobbying governments and going to court to fight against privacy invasion and oppression by the end of the week. But since people continue to play by their made up rules and continue to hand over money to them, they don't care.

Regarding education...

... and people using centralized services to buy altcoins - I think it's very important to reiterate that decentralized and or trustless crypto exchanges do exist.

I just made a quick forum search and found this thread, but maybe there are other better ones that collect decentralized exchanges.

Personally, I can recommend Bisq and Robosats, as well as https://boltz.exchange/.

The accountability centralized exchanges has for the government makes it seems so unfavorable to most of us, who are advocating for decentralized system, the purpose of Bitcoin has been core at most times and interpreted different, Thereby holding people to ransome at one stage in life

Looking at the above list, there's no doubt Binance Exchange seems to be the worst of them all, just my opinion and my experience, Once a decree is made by government, Binance immediately takes action against traders in their eco system, which doesn't look good to a serial traders like my self

Boycott those exchanges would have taught them a huge lesson, but then some people still feels entangled with them hence they can not step, and search out a better favorable system, it's no longer a new how Binance worked with various Government agencies to inflict pains amongst their ecosystem, good example of this can be found in this cases https://www.thecable.ng/binance-restricts-281-nigerian-crypto-accounts-to-prevent-fraud/amp

I do honestly think that most of those projects or companies, Mostly centralized agencies advocating for privacy protection, ain't really private at all, rather they use that word to attract us and then deal mercilessly with those who makes use of their services, I advice we stage on guard. And be extremely careful with those exchanges, in order to have a secured data, Without our information being exposed out there...

You can add Thormixer to the list of taint proclaiming services:

I thought Wasabi and their coordinator were the only "privacy-focused" (yeah right) service that had blacklisting and restrictions like that, and now we can add Thormixer to that list. Why do I have the feeling that this is going to become a norm in the future? So-called selective privacy if we believe you deserve it, but we will never tell you why you don't deserve it, and will update our rules as time goes by.