Signal started out as an Alternative Android SMS app that opportunistically upgraded text messages to use encryption when both parties had Signal. It exclusively used sms for transport, so phone numbers were baked deeply into it in a way similar to Twitter's 140 character limit.

It's true that having to disclose your phone number to the service and especially to other users is now a significant drawback compared to internet-first services like WhatsApp that use entirely separate identifiers. Many people have raised this objection, and to their credit they've at last rearchitected to allow exchanging messages using user names and without your phone number being disclosed to the other party.

They still have the phone number at the core of account registration, I suspect for similar reasons to the use of a (one-time sign up) captcha: because they raise the cost to create spam accounts. I'd understand if that's not acceptable to you, but I don't think "unacceptably poor" is a reasonable assessment of their handling of user privacy.

Another example of their approach to privacy: they went to great lengths to design their Giphy search to avoid revealing your search terms to them or your IP address to Giphy: https://signal.org/blog/giphy-experiment/