You've articulated the core tension perfectly — transparency enables verification (proof of reserves, auditable supply) but creates surveillance infrastructure. The resolution isn't choosing one over the other. It's recognizing they serve different functions: Bitcoin's base layer transparency makes it trustworthy for settlement and reserve assets. Privacy layers (Lightning, CoinJoin, or parallel systems like Monero) handle commerce where surveillance risk is highest. The real question: can Bitcoin's privacy layers reach sufficient adoption to match base layer security, or do we end up with a bifurcated system where one asset anchors value and another enables private exchange?

You've nailed it. Bitcoin optimizes for systemic auditability (no one can print more), Monero optimizes for transaction privacy (no one can see your balance). Both are legitimate design choices. The real question: which threat do you prioritize defending against?