How does Blockstack address fluctuations in Bitcoin's exchange rate?


Imagine the exchange rate for a Bitcoin drops from $1000 to $1 tomorrow. How does Blockstack compensate that? This would completely work against the mechanisms against name squatting.
And how does a blockchain migration handles prices?


If it were to drop that much (i.e. over an order of magnitude), then the security of the chain itself would be jeopardized since miners would switch to more profitable blockchains. That is a much bigger problem than squatting, since the loss of the mining power would make it easier to reorg the chain and reorder Blockstack transactions. In this event, we would migrate to a different blockchain, and set a global price multiplier in the code to make sure names and namespaces effectively cost the same.

We have been fortunate so far that the price of Bitcoin has been increasing since we migrated off of Namecoin. Bitcoin was trading at $250 USD when we made the switch, so squatting has been getting more and more expensive.


I am not so sure that a lower price or price descent would cause BTC to go away or be endangered.
I think the price of the BTC will be directly related to the hash power. If BTC goes to, say, $1, then the hash power would be reduced to 1/250 of the power in order to produce the same $/hash. A hash takes x joules (watt-seconds) to do, so in terms of electric power a hash takes a fixed cost to compute (the cost goes down with ASICs etc). So if you spend x joules to get 12.5 BTC in a block, you have to take into account how often you will be successful, which is based on the number of other miners on that chain. The more miners, the more rarely you win. So the hash power will not disappear if BTC price goes down, but will decrease such that the mining cost is balanced with the block reward. There is a negative feedback keeping the market in a balanced state.

Perhaps this will play out in the unlimited results.