It does still work - just causing an incredible increase of the number of orphaned blocks.
Sort of a reward deprecation from the 50 BTC to.. something less, which was not planned in the initial design
Yeah. I still think this is a problem. Are the developers acknowledging this or not ?
This is causing more orphans and more stales for everyone mining
Unless the tx fee is so high which could compensate the orphans, miner will start to reject tx like what Eligius doing. Eligius is simply putting the burden on other miners and increase their orphan rate.
Although I agree SD is abusing the network, a successful BTC network should be able to handle 1000x of current volume. If SD is a stress test, the network is failed. It means the network cannot grow further.
Without changing the current infrastructure, there are 3 options: 1. Miners will allow only a limited number of tx in a block, but this may leave some tx never confirmed and BTC is dead; 2. Increase the tx fee by 10x or even 100x; 3. A revised tx fee formula to punish people using coins with <3 confirmation.
All these solutions, however, would be short-term. If more people use BTC (which most of us want to see), the same problem will emerge again. If this could not be solved, this will be a major bottleneck of the whole system.