As cryptocurrency has become more popular, it was only a matter of time before it entered the credit card space. On Dec. 2, the cryptocurrency-based lender BlockFi made the move official by announcing it will launch a bitcoin rewards credit card in the first quarter of 2021. This isn't the first time crypto has been used in a rewards program—bitcoin debit cards are aplenty. But this will be the first credit card of its kind in an industry dominated by cash back, points, and miles.
- BlockFi, a cryptocurrency-based lender, says it will launch its Bitcoin Rewards Visa Credit Card, the first credit card to offer rewards in bitcoin, in early 2021.
- Cardholders will earn 1.5% back on each purchase, all in the form of bitcoin.
- The waitlist for the card is already open to BlockFi account holders and will open to the public in January.
How the New Bitcoin Rewards Card Will Work
Traditionally, rewards credit cards have offered cash back, points, or miles. BlockFi's Bitcoin Rewards Visa Credit Card will be the first to offer rewards in the form of a nontraditional currency or digital asset like bitcoin. And while bitcoin isn’t classified as a security, many people treat it as such, which also makes BlockFi’s new credit card the first to offer an investable asset that’s not cash.
With the Bitcoin Rewards Visa Credit Card, cardholders will earn $250 if they spend $3,000 in the first three months, plus 1.5% back on each purchase, all in the form of bitcoin. Credit limits are expected to range from $5,000 to $25,000, depending on the cardholder’s creditworthiness. The annual fee is $200.
If you’re already a BlockFi customer, you can join the waitlist for the new card through your account. You can do the same if you’re not yet a BlockFi customer by creating an account. Without an account with the financial institution, though, you’ll need to wait until the new year to join the waitlist.
Is the Bitcoin Rewards Card Worth It?
Introducing crypto rewards to the credit card industry should help elevate the visibility and legitimacy of bitcoin and other digital currencies. But the Bitcoin Rewards Visa Credit Card’s $200 annual fee isn’t doing the crypto world any favors.
Among cash-back credit cards, 1.5% back is a common rewards rate, but it’s not the best out there, and the vast majority of cash-back cards don’t charge an annual fee. So the prospect of earning 1.5% back in the form of bitcoin, with a $200 annual fee, is unlikely to be of wide appeal, especially among people who aren’t already crypto enthusiasts.
Of course, earning crypto instead of cash does give cardholders the opportunity to take advantage of price increases. At this writing, the year-to-date return on bitcoin is over 170%, according to Coindesk. But bitcoin and other digital currencies are subject to high volatility, which can mean both gains and losses. For example, the currency’s price fell from a high of $19,783 in December 2017 to under $3,640 at the same time the following year.
So while the potential upside of investing in crypto could make the steep annual fee worth it for die-hard fans, traditional rewards credit cards are unlikely to see a lot of competition for wallet space.