The crossroad, what path to take from here

[corebob]

Privacy is a fundamental part of what the protocol and software is trying to achieve, and it goes a long way to achieve exactly this.
If that is tampered with, something like 80% of the source code becomes redundant.
The decentralized aspect of bitcoin and the encrypted addresses would no longer be necessary.
Pretty much the entire source code becomes inefficient and/or redundant.

With this scenario a much more efficient model would be to use a centralized solution with a handful of servers around the world and let all the users connect to them using "thin" clients. No need for a distributed network anymore. Transactions would be much faster and easier to fix, change and revert in retrospect.
This is similar to what we already have today when we use online bank services or PayPal, but with the possibilty of lower transaction fees.

With this is mind, which path do you think bitcoin should take?