Cryptocurrency has spent years as a niche curiosity, but recently hit the spotlight, at full speed. And while not everyone understands cryptocurrencies, most Americans still want them. In fact, 14% of Americans currently own cryptocurrencies, and that number could double in the next year according to a poll by The Ascent.
One way many people can jump on the cryptocurrency bandwagon is through their credit cards. We found that 65% of respondents would like a credit card with cryptocurrency rewards. Issuers need to read the same data, because credit cards with cryptocurrency rewards are becoming a reality.
Of course, there's the old saying that just because you can, doesn't mean you should. Cryptocurrencies may be the craze right now, but that's not necessarily reason enough to forgo more traditional reward cards like cash back or travel cards.
Cryptocurrency is volatile and difficult to value
The biggest drawback of crypto credit card rewards is probably volatility. The value of miscellaneous changes every day and often by large margins. This extreme volatility means that the value of your premiums will vary significantly, making it impossible to estimate the return on your spend.
In comparison, cash back reward cards have constant rates of return. Sure, most currencies have some variation, but the US dollar is nowhere near as volatile as Bitcoin or Dogecoin. This means that your 3% cash back card will be as valuable today as it was yesterday.
Likewise, your credit card point value can vary widely between rewards programs and can be written off by changes in rewards redemption rates. But these changes are typically infrequent and often come with some sort of warning from the broadcaster. If the value of Bitcoin drops by $ 500 per coin (quotation in real time), you probably won't have enough points to redeem your rewards.
Digital currencies are difficult to spend
Unless you're planning on selling your cryptocurrencies for cash, using your cryptocurrency rewards is likely to be a little tricky. In fact, even turning it into cash might require you to create a crypto account with some third-party sites like Coinbase.
The number of retailers and other merchants willing to accept cryptocurrencies as a payment is growing, but not rapidly. A handful of car dealerships, for example, will accept Bitcoin payments, but you're probably not earning enough cryptocurrency from credit card rewards to buy a new BMW.
Likewise, there are some retailers, such as Newegg and Overstock, who will accept some of the many types of cryptocurrency as a form of payment. But, again, the amount of cryptocurrency you get from your rewards card will likely mean you've been sitting on those rewards for a while. And their value may drop while you're saving for that macrame hanging on the wall.