Every Bitcoin transaction is public forever. Anyone who links an address to you can follow the coins backwards to where they came from and forwards to where you send them, and often estimate everything you own.
Three reasons it matters
- Safety: a public balance makes you a target. Physical attacks to force people to hand over keys are a real and documented risk.
- Commercial secrecy: a business does not want competitors or suppliers to read its revenue, its margins and its payroll.
- Fungibility: if some coins are treated as tainted because of their history, one bitcoin is no longer worth another bitcoin.
Privacy is not the same as hiding wrongdoing. Your salary, your rent and your medical bills are private in a bank account; on a public ledger they are not, unless you take care.