Airline miles and hotel points are so 2010. The next round of credit card disruptors will offer something much more millennial … bitcoin rewards.
The recent mainstream adoption of bitcoin is getting yet another “cashback” boost, with rising fintech companies planning to release new credit cards that would offer a cashback on every purchase in bitcoin.
Considering the rapid appreciation of bitcoin in the last 12 months, the idea seems appealing to many, as they can potentially earn more than they spent in cashback.
Even the crypto skeptics would enter the cryptocurrency “investment” sphere by default, without risking their own money.
“People are not interested in spending Bitcoin right now, but are interested in accumulating it. If people don’t understand Bitcoin as money yet, they certainly will understand it as a better reward,” Fold CEO Will Reeves recently said.
Fold, a San Francisco-based crypto startup, is one of the fintech companies that has released credit cards with bitcoin cashback.
Even though the cashback the customers are getting is 1% to 2%, for the last six months, customers are averaging 8.5% back on all of their purchases due to bitcoin's increase in value.
Currently trading at $58,000, Bitcoin has appreciated nearly 200% year-over-year.
Another fintech company for crypto investors, BlockFi, will offer a flat rate of 1.5% back in bitcoin on every purchase. So far, over 100,000 people have signed up.
The company said that the cashback will be converted into bitcoin tokens that the cardholder can withdraw, trade, or use as collateral for a crypto-backed loan.
This is yet another game in which traditional banks, still offering tired old rewards, is being left behind.
Chase Freedom Unlimited currently offers a sign-up bonus of $200 after spending $500 in the first three months from opening an account. In addition to 1.5% cash back on all purchases, it now offers bonus rewards on travel, as well as at restaurants and drugstores.
With a $0 annual fee, Discover offers 5% cash back on up to $1,500 in spending per quarter in categories that the customer activates.
Visa could blow them away. Last year, both Fold and BlockFi teamed up with payment facilitator Visa, which handles more than half of all credit card network purchase volume in the U.S.
Larger institutional investors, such as Visa, who jumped into the crypto market helped the drive of the recent surge in bitcoin to record levels.
In late January, Elon Musk added the word “bitcoin” to his Twitter profile. Just hours later, it caused a 15% rally in the currency’s value. The tweet followed Tesla investing $1.5 billion in bitcoin.
Last October, payment company Square said it bought 4,709 bitcoins, worth approximately $50 million, which represents about 1% of Square’s total assets.
PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services, the first approved entity for a conditional Bitlicense in New York State.
And on Tuesday, Fidelity Investments and Square, among others announced they are forming a new trade group designed to lobby the regulatory environment around bitcoin. shape the way bitcoin and other cryptocurrencies are regulated now that it is gaining so much mainstream attention.
