Right, but it has Bitcoin's transaction traceability, which potentially limits fungibility and consequently security against confiscation.

That's true, and the way people use addresses plays a big part in traceability as well. There's honestly a lot of work to do to bring better practices into the mainstream, for instance HD addresses allow you to generate child addresses for every transaction, yet most folk hold their crypto on an exchange with a single address for all transactions. The industry needs to focus on security-usability and education, and we're starting to see that as new wallet apps are developed with the user (rather than profit motive of exchanges) in mind.