Bitcoin was supposed to be digital e-cash. Cash has to be fungible. Monero is the best fungible digital e-cash contender out there right now. The day people start to worry about whether the funds they are being paid in are tainted. They start to feel that sense of creeping dread that maybe that 20 grand they just accepted as payment for their car could be worthless. That is the day they switch to XMR in mass. Unless bitcoin manages to overcome the politics that are burdening it and find a solution to this problem. Which they might.
Won't confidential transaction solve the problem of fungibility of bitcoins?
No chance Bitcoin of getting CT in the short term. But many users need fungibility Right Meow, so Monero fills the gap.
Medium term, perhaps CT will be successfully launched on a sidechain. But you can still see which BTC are associated with that tainted sidechain, so back to square one.
Long term, good luck making a hard fork to add a feature rather than fix a dangerous bug.
Why does it have to be a sidechain causing more problems and headaches? Why not make use of bitsquare and make that the layer in between BTC and XMR direct transfers? Would that make a safer solution?