Today, there aren’t really any good reasons for a US customer to use bitcoin instead of a rewards credit card. He or she would be giving up 0.5% in bid/ask spread on the listed purchase price, up to 1% (or more) to acquire the bitcoin initially, and 1% or more in opportunity costs for not using a credit card. The only reason, then, that a consumer would opt to use bitcoin for purchases would be if merchants offered compelling discounts on their products to drive that behavior change.
With its two-sided market, Coinbase might be the only bitcoin company with the potential to start
this type of program right now. They already allow users to make “instant buys” to true-up their accounts every time they spend bitcoin. And they already make it super simple for merchants to pass on bitcoin cost savings to customers via discounts. Now they may be closing in on the critical mass necessary to offer a compelling rewards program for their users. You might see them start tracking “bitcoin rewards” that accrue to users who shop with their merchants.
“Because you used Coinbase, you saved $25 on your hotels, $10 on your subscription TV bill, and $1 on your Alpaca socks.” That’s a much more compelling pitch for the merits of bitcoin than the long-winded, esoteric one about nationless currencies and being one’s own bank.
Translation:
After a year being obsessed with Bitcoin, it would appear that the best thing Silicon Valley can think to do with it is reinvent the AAA card.
I’ll move over to a Coinbase rewards program, sure. When you pry my American Express from my cold, dead hands.
