What can be done in order to improve privacy in bitcoin transactions? Privacy should be default and  not an optional property - even when using stealth addresses or confidential transactions, your bitcoin balance and transactions in the wallet are transparent to anyone. All of these are awful characteristics for a currency.

We all live in post  Snowden era of full spectrum surveillance, and ridiculous anti-cash propaganda. Cash is government’s  legal tender and is protected by law.  But the implacable war against cash payments waged by big government and banks worldwide is gaining new momentum. The excuse or reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, and other villains, real or fictional. But their main and real intention is to limit or even prohibit cash, in order   to force the public at large to make payments through their financial system in order to enforce their unstable fractional-reserve banks and, more importantly, to expand the ability of governments to monitor on and keep track of their citizens’ private financial transactions. 

Fungibility is an essential property of money that makes every unit of this currency interchangeable. One can pay the service or a product with a coin or a paper note, and the receiver does not  care where it came from, as long as this banknote or coin isn’t counterfeited, he will accept it and exchange products or services for that banknote. This is how physical cash works. Creating Bitcoin fungibility is not a trivial task, as far as I understand. There is high probability that anyone who interacts with you knows exact amount of bitcoins  in your wallet.  Tor can not keep private your wallet linkage to other wallets. 
Real question is -- How  we can enforce fungibility on a transparent blockchain where every transaction is visible?
Pieter Wuille posted an answer earlier today that covers some of what is already being explored in the pipeline for additional privacy.


  ... but improvements are continuously being worked on (search for things like MAST, TumbleBit, Layer-2 payments, Taproot, signature aggregation, scriptless scripts, confidential transactions, ...)


In addition, further ideas like change obfuscation have recently been seen on the [bitcoin-dev] mailing list.

There will no doubt be even further suggestions in time.