So there are lots of reasons why people might not do this. And that may explain why this topic is so old and stale. It was being brought up back in 2010 and here we are, years later, people still arguing about this topic and yet there are many more thousands of merchants still accepting these transactions and not losing money.
Double-spending is not yet much of an issue because very few merchants are vulnerable to it. You have the BlockChain.info mixer, and SatoshiDice and its clones. The latter easily respond by spending double-spend attempts 100% to fees, and proving their honesty after the fact by keeping records of the double-spend.
On the other hand, the biggest use of Bitcoin for commercial transactions is buying drugs. (I exclude BitPay's Avalon orders because they are related to the system itself) The Silk Road requires six confirmations for a deposit, and implements an off-chain transaction system for privacy and convenience.
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Peter pointed out that a DoS-resistant replace-by-fee implementation requires
the implementation of either recursive fee evaluation, or strictly limiting
unconfirmed depth.
He has told me he has taken the former approach, and is done most of a
recursive fee evaluation implementation with reasonable O() scaling. Along
those lines I've increased the reward to $1000USD, again with the advice that
the reward is for a proof of concept, and rigorous engineering is not required.
4-8 days of work should be your target effort to keep hourly reasonable to the
level of a professional early in their career.
Yes Peter, you still are in competition with anyone else taking on the
challenge. I stand by my comment about what you need to do to be taken
seriously. Good luck. :)
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