Segwit started as an element in elements alpha. It allows for safe chaining of pre-signed transactions, which is important for payment channels and lightning network. The version in elements just changed how we defined txids, which we can't do in bitcoin. It's hard to imagine doing hard-forks in bitcoin just for this. Non-security hard-forks are going to be very hard to get consensus on.
As deployed, there's this key insight that you deploy a type of extension block and you can enforce inside of this extension some new rules. Some things that look like hard-forks turn into soft-forks. So we can sneak in confidential transactions as a soft-fork. So you have the base block and then you commit to something, and in this other block you reveal the real data that shows you own this bitcoin. As a highly desired extension, it kind of fits this model.
Source. (My emphasis)I knew there was more to this than a "malleability fix".
It's one of the largest changes to bitcoin ever. It has touched nearly all areas of the bitcoin code base, like p2p, wallet, consensus, every layer.
OK. So the whole codebase has been modified to account for this one side-chain, the reason being that if affords confidentiality for LN and to no-one else. For this reason alone it is cancer.
Now. It is certainly desirable to fix malleability and even allow side-chains to use the BC for their own back end systems. The proper way would be to allow others to plug-in a module at run-time so that anyone could create their own plugin module and distribute it with their wallet software. Hell. You could even support an unlimited number of "variants" from Bitcoin Core. LN could then have created a specific plugin for their wallets. As it happens, I've wanted the reference software to go down the plugin path for quite some time (the address creation, hash used, the mining method etc) but it is clear that is just a pipe-dream.
It seems to me that should this go live, then LN will be the only side-chain worth using with guarantees of confidentiality and everyone else has to wash all their clothes in public. Is this the case?