Bitcoin is already practically anonymous. If you sync your wallet through a honeypot node or you provide an easily tracked route to your identity, your anonymity could potentially be compromised with Bitcoin (or if you make the hilarious mistake of buying your Bitcoins on Coinbase). Tracking services are becoming more and more advanced at forming relationships between Bitcoin addresses sending and receiving funds.

A conscientious Bitcoin user, however, will never have his/her identity compromised. The problem is, people are really bad at being conscientious. This is a key strength of Monero over Bitcoin, and why blackhat markets are becoming increasingly excited about this technology. Monero is inherently virtually impossible to trace, as an FBI agent has acknowledged recently. If I were an authority responsible for tracking cybercriminals, tax evasion or money laundering, I would be very nervous about the widespread adoption of Monero.

Monero is also far more convenient for users, as it can process upwards of 1700 transactions per second (no waiting 6 hours for transactions to confirm). A far cry from Bitcoin’s 7 transactions per second (assuming SegWit doesn’t pass). Monero is also based on the CryptoNight hashing algorithm, which is ASIC-resistant. This will make it very difficult for any entity to acquire a monopoly on hashing, since any user with a decent CPU can get a respectable hash rate.

Ask yourself this simple question: if you had an interest in tracking people’s money, would you rather them use Bitcoin or Monero? The answer is obviously Bitcoin. If Monero sees increased adoption, authorities and governments will need to fundamentally change the way they handle cybercriminals, tax evasion, money laundering, etc.

Bitcoin may see SegWit pass and perhaps adopt ring signatures in the future, in which case I would have to say that Monero offers little significant benefit over Bitcoin. For now it looks as any changes to Bitcoin will take years to generate the consensus, which allows Monero time to gain popularity and adoption based on the benefits it offers over Bitcoin.

The primary downsides I see to Monero:

No instant payment notification service (like http://block.io for Bitcoin). This is a huge problem for online services that wish to accept Monero. Lack of community involvement. Many of the forum posts on their website go unanswered. They need to improve this if they to build a knowledge base for people to use Monero without issues. Their developers’ identities are known. Bitcoin’s founder has completely disappeared. This ensures that the authorities cannot threaten to shut down or change the technology by compromising one single entity. Monero is vulnerable to forced change (as is just about every Cryptocurrency other than Bitcoin)

Monero has other key advantages over Bitcoin which are described in this lovely stack-exchange post

TLDR: In it’s essence, Monero is far better than Bitcoin for all of the reasons why people love cryptocurrency. Bitcoin’s primary advantage over Monero is its wide acceptance, and the security of its blockchain. If Bitcoin does not adapt to its weaknesses, Monero will be a serious competitor.