That's... actually a really interesting idea, but you have to consider who you're building the system for - governments, or normal everyday people?
There is a principle, that I think has basically been proven at this point, if not academically:
A: In any non-optional system used by n people, the bad actors using that system are < n/2 (read: not a majority)
B: It is impossible to prevent bad actors from misusing any system.
C: Trying too hard means the system necessarily damages good actors.
Therefore:
D: Any system that punishes bad participants more than it helps non-bad participants is degenerate.
Bitcoin can be seen as a rejection of a system suffering from C. For perfectly legitimate businesses and people, sending money is an unmitigated pain in the ass, substantial bites taken by middlemen, arbitrary negative action (c.f. civil forfeiture, paypal freezes) and so on. Bitcoin solves almost all of those problems, but makes lives easier for the bad actors too (but not enough that it substantially increases corruption in the world - bad actors gonna bad act)
Now, if your hypothetical system is strictly opt-in, perhaps with social pressure for politicians and such to use it, then I'd have no trouble with it. Were it to become the de facto currency, on the other hand, the problems we have with government overreach and data mining just become a lot worse.
If we accept B as true, then it makes more sense to design for the case of innocent, law abiding people first, out of fear of harming them due to C.
Put another way, I'm a lot more worried about government misusing things under color of law, than I am worried about government corruption. At least regular people can oppose the second one in good faith, while the first one always comes with the "it's legal, so?" baggage.
It's strictly opt-in, but you won't be able to buy anything if everyone else requires auditable money and you don't want to opt-in. The more people who adopt it, the less tenable it is to stay out.
Governments are people. People who use this system nefariously can be sanctioned by refusing to accept money they've touched. We're so afraid of governments misusing their power because our checks and balances have failed miserably, but it's not so bad that anyone wants to use the ultimate fallback of revolution. Merit capitalism is a check that the people control directly. People don't need to revolt to reclaim power anymore.
You're going to have to convince people that adopting this tool is better for them than what they have now for it to stand a chance of adoption.
From a purely selfish standpoint, I would not want to use this system, because I don't want advertisers, insurance companies, malcontents, stalkers, debt collectors, busybodies, three-letter-agencies, data brokers, or any other random with an internet connection to know that I spent money at a hypothetical STD clinic or received money for participating in a scientific study.
This plan introduces a huge number of of unknown unknowns, where right now, we've got a pretty good idea of how widespread the corruption is, the forms it generally takes, and what, if anything, we can do about it. And since past behavior is the best predictor of future behavior, I can look backwards to see how behavioral data is abused right now, and say with complete certainty that it would be abused more under this system.
I agree that conservatism has virtues. Change does introduce unknown unknowns. I think there's a good strategy for handling them: when people do undesirable things, sanction them.
Change is inevitable. Zcash is here, so regulation is dead. Conservatism isn't an option: we have to choose how to adapt to change. I think merit capitalism is the right choice.
There is a principle, that I think has basically been proven at this point, if not academically:
A: In any non-optional system used by n people, the bad actors using that system are < n/2 (read: not a majority)
B: It is impossible to prevent bad actors from misusing any system.
C: Trying too hard means the system necessarily damages good actors.
Therefore:
D: Any system that punishes bad participants more than it helps non-bad participants is degenerate.
Bitcoin can be seen as a rejection of a system suffering from C. For perfectly legitimate businesses and people, sending money is an unmitigated pain in the ass, substantial bites taken by middlemen, arbitrary negative action (c.f. civil forfeiture, paypal freezes) and so on. Bitcoin solves almost all of those problems, but makes lives easier for the bad actors too (but not enough that it substantially increases corruption in the world - bad actors gonna bad act)
Now, if your hypothetical system is strictly opt-in, perhaps with social pressure for politicians and such to use it, then I'd have no trouble with it. Were it to become the de facto currency, on the other hand, the problems we have with government overreach and data mining just become a lot worse.
If we accept B as true, then it makes more sense to design for the case of innocent, law abiding people first, out of fear of harming them due to C.
Put another way, I'm a lot more worried about government misusing things under color of law, than I am worried about government corruption. At least regular people can oppose the second one in good faith, while the first one always comes with the "it's legal, so?" baggage.