"Points" and "Cash Back" are so last decade. The 2020's is the decade of Bitcoin Rewards!
As anyone who uses a credit card knows, the concept of cash back or rewards points is quite enticing. But the reality of these perks is often, well, mixed. You save them up for a big trip but then the dates are unavailable, prices change, the points are devalued, or, well, a pandemic gets in your way.
Of course, you can go to straight cash back, but then what? You are getting paid in a currency that is currently being inflated away by an out-of-control government. That's not great either!
We are just now entering the age of a new and improved reward system: Bitcoin Rewards credit cards!
There are a few offerings currently, and you should expect to see more in the near future. These work quite similarly to cash back cards, except that the funds you receive are automatically provided in Bitcoin, which you can then transfer wherever you'd like.
If you are already sold on Bitcoin, I don't have to tell you why that is valuable. For those who are unconvinced, well, let's just say it's a good hedge and a semi-passive way to accumulate some portion of the 21 million total Bitcoin that will ever exist.
Looking for a better understanding of Bitcoin? Check out Bitcoin Explained at 5 Levels - Crypto #2
That said, I have now tried out two cards now: Fold's Bitcoin Rewards Card and BlockFi's Rewards Visa Signature Card. Here are some quick thoughts on each:
Fold's offering is actually a prepaid and rechargeable debit card, so that is an immediate drawback. And it also comes with a $150 upfront fee. That said, they do plan to upgrade to upgrade to a credit card that will be free to existing cardholders.
Once you have the Fold card, Fold deploys an addicting randomness aspect to your rewards: for each transaction you spin a wheel that determines your rewards. This could be up to a full Bitcoin, but is more likely to be around 1-1.5% of your purchase translated into Bitcoin. Additionally, you can spin their free wheel every day which also provides some "free" sats.
A sat is 1/100,000,000th of a Bitcoin, short for Satoshi
So what does that all net out to? My usage has been somewhat sparse. Between the recharging and the debit aspect that seems to get the card declined from time to time, I don't use it much. But I can set it up with Apple Pay and it works well online, so I've amassed $160 worth of Bitcoin (~330k sats) in about 6 months.
So end of the day the payback is decent, but it may not be worth the hassle for most until Fold gets some of these features ironed out.
I just recently got off the waitlist for this, so I'll have to write a full review once I do get the actual card! That said - the BlockFi card looks promising from the metrics. It has no annual fee and provides 1.5% back in Bitcoin as a base rate. For the first 90 days, they boost that to 3.5%, and for any spend over $50,000 on the year they'll boost it to 2%.
The economics of that obviously come out positive. But as an added benefit, the earned rewards are added to a BlockFi interest generating account, so the Bitcoin rewards will automatically earn ~5% APY in interest. That seems small, but if you think about traditional rewards points that can pile up to $3-$5k (or more) worth of points, that 4.5% per year can become substantial, especially when you look at it over a period of years. And of course, if you are bullish on Bitcoin's value over time, the economics get even better.
Just like the Fold Card, the BlockFi card is a card for "savers." If the draw of spending points to get free stuff is your jam, then these cards may not be for you. But if your goal is to save for the future and you plan to have your Bitcoin around for several years, then the BlockFi card could build up an impressive stack in that time.