It is not. If you can choose between buying Bitcoin, and being KYCed, or buying some other stocks, and also being KYCed in the same way (while also having easier ways to handle paying taxes), then the choice is obvious: why bother buying crypto, and trying to convince the government, that you are not a criminal, while you can trade regular stocks, and be in a much better position?

Now, the only decentralized part is related to crypto-crypto transactions. If you touch fiat, or exchange some goods or services for Bitcoin, then that part is no longer decentralized. And for exactly this reason, some Bitcoin users exited at the end of 2024. Now, some of them still do some crypto-crypto transactions, but since then, they clearly separated their crypto assets from their fiats, just because of the new regulations.

Of course. And then, even if someone uses Monero, it doesn't matter that much: when every crypto you bought is counted in fiat, and known by the government, and when every crypto you sold is again counted in fiat, and used to calculate your taxes, then the whole system has the same privacy, as regular stocks. Maybe in case of crypto, it is a little better, because crypto-crypto transactions can still be hidden. But: even if you don't submit your tax report to the government, then others still do. And if a lot of users share their lists of transactions or addresses, then the whole anonymity set can be splitted into parts, and analyzed easier.

Even if there are, then sooner or later, you may want to sell your crypto for fiat, for whatever reason. And then, it is much harder to pay taxes (or they are simply bigger, if you cannot explain, how you got your crypto). Which means, that by making your initial purchase more hidden, you make your life harder, when you try to buy some goods and services for crypto, or when you try to sell it for fiat.

And then, you can be a millionaire in crypto, but unable to use it normally, like other millionaires in fiat or stocks.

If you want to hide properly, then you should run a full node. If you don't, then SPV-like wallets are much easier to trace, because then, you are not a part of the P2P network: you are on the edge of that network instead, and then it looks more like client-server model, where you connect with other server nodes as a client, and you ask them about your transactions or addresses. And then, you don't have to download the whole chain, but still: you inform other peers, which part of the chain you are interested in, and it harms your privacy a lot.

bitcoin itself is fundamentally decentralized because there's no central authority controlling it, and all transactions are transparent and unchangeable. for exchanges that require you to provide your identity to acquire bitcoin have nothing to do with bitcoin's decentralization, as no one recommends buying bitcoin through an exchange in the first place... p2p is more encouraged for people who want to acquire bitcoin without having to submit their identity, and it's preferred for those who want to maintain their privacy.

Local sellers are usually cooperated with centralized exchanges.

They might not ask KYC to trade with them, but if the banks and centralized exchanges know the sellers, they might watch the buyers too. Because it's traceable the banks know that Bitcoin seller send fiat money to your banks, so they likely know you have Bitcoin.

Most people avoid to submit KYC because they don't want to suffer data breach, so they won't have any problem in this situation. It's different if someone want to be completely anonymous, because this leave a trace.

The main problem is some people are so used to using banks and paying with their credit cards that it's hard for them to fathom that most things can be bought and sold anonymously.

If you don't want your ID checked, just use cash. I use it all the time and honestly I've been looking more and more like a dinosaur due to the narrative that cards are convenient and only drug dealers use cash because they have dirty money, Not to mention the fear of germs that the governments were using to make people abandon cash during the pandemic.

Protect your right to be anonymous. Use cash and bitcoin!