Is earning Bitcoin as a credit card reward more valuable than earning cash? The math says yes. In fact, even with all the volatility in the Bitcoin market in recent years, Bitcoin rewards deliver far more value than straight cash back credit cards. That’s why the team at Blockrize is building the first-ever credit card with rewards in Bitcoin (as well as other cryptocurrencies). To test our initial question, we analyzed credit card rewards earnings for the past five years to see if Bitcoin or cash back delivers the better reward.

To compare the difference in credit card rewards, we calculated the effective cash back rates using historical data. This rate is the percent a cardholder actually earned on their purchases, accounting for any increase or decrease in the value of the reward. The effective cash back rate is equal to the value of all the rewards earned in a period divided by the total amount spent on the card during that same period. For the test, we set a card rebate rate of 1% and analyzed five different time intervals ranging from one to five years, each ending on July 1, 2019.

Here’s how the the effective cash back rate of the cash rewards plays out. For the five-year interval, assume a cardholder received their cash back card on July 1, 2014 and received their first cash reward on August 1, 2014. This process continues for a total of 60 months, with the cardholder earning their most recent cash reward on July 1, 2019. The sum of the rewards earned over that period is divided by the amount spent over the same period which, to no surprise, results in an effective cash back rate of 1%. (Note: we did not include inflation as a factor as many cash rewards are applied as statement credit or spent in the near-term.)

To determine the effective cash back rate of receiving Bitcoin rewards over a five-year period, we ran a similar model and kept the variables of credit card spend and reward rate equal to the first model. However, when a cardholder received their rewards on the first of every month, the dollar amount was converted into Bitcoin at the closing price of Bitcoin on that same day. This continued for a total of 60 months, and assumes the cardholder held their Bitcoin rewards for the full duration. We proceeded to add all the Bitcoin rewards throughout the period to find a total amount of Bitcoin earned by the cardholder. The total amount of Bitcoin earned over the period was then converted into USD based on the closing price of Bitcoin on the most recent day that rewards were earned and divided by the total amount spent in the five-year period. The effective cash back rate: 15.97%.

We retested this model for each of the five time intervals and consistently arrived at the same conclusion. The graph below shows that, earning Bitcoin as a credit card reward is much more valuable than earning cash back.

Some credit cards offer more than 1% cash back — 1.5% cash back

or, in some cases, even 2% cash back. That doesn’t change things.

Bitcoin rewards still have more value. We should be clear that past performance is not indicative of future results. The idea of possibly earning 16% effective cash back next time you book a flight, buy gas, or even get a cup of coffee is incredibly exciting. That’s why we’re building the Blockrize card. Automatically earning Bitcoin saves consumers from having to manually invest their rewards every month and the fees that come with it.

The Blockrize card will offer a simple and low-risk way for consumers to access Bitcoin and other cryptos for the first time. Additionally, it will allow crypto enthusiasts (like our team) to earn a more valuable credit card reward. We’re working hard to launch the Blockrize card and appreciate all the support we’ve had so far! If you’re interested in getting the Blockrize card, please join our waitlist. Or feel to reach out with questions at contact@blockrize.com.

*We used the closing price of Bitcoin on the first of every month within the time interval when determining the effective cash back. This data was sourced from CoinMarketCap.