Early last week I was poking around my usual travel sites scouting out a family trip to Hawaii when I noticed something odd: PointsHound has quietly started offering bitcoin as a new option instead of the usual airline miles when you book a hotel room. So I called them and asked what the heck was going on.
I’m all for bitcoin if people want to use it, but I still think it’s a long way from a true digital currency. The value is too volatile. Too few people accept it. It seems even more vulnerable to theft than stuffing money under mattress. (One TV news anchor had his bitcoin gift certificates stolen because he was dumb enough to reveal the encryption keys on the air.)
Some, and maybe all, of these issues can be resolved. But it still reminds me more of a speculative commodities bubble than actual currency trading. And lately I’ve been reading a fascinating book, Debt by David Graeber, that has me rethinking what money is and what gives it value.
Fortunately PointsHound isn’t being reckless. I was afraid that if they awarded bitcoin today and had to turn it over next month, after the stay is complete, there was a chance that the increase in the bitcoin’s value could run them dry. They apparently bought enough bitcoin a while back, so it has already appreciated a fair amount. And because they already have the bitcoin, they can assign it now, set it aside, and not worry about what the price is in the future. You can read more on their blog for advice on storing your bitcoin in an online account and keeping the encryption key safe.
If the experiment goes well — and there has already been some interest from customers — then they may look into other ideas like futures contracts to ensure they can continue providing this option.
The nature of this experiment is good news for you, too! My understanding is that PointsHound is determining how much bitcoin to award for each reservation based on their acquisition cost. You don’t have to worry too much about how fluctuations in value affect how many coins you get if you book tomorrow rather than today. Like earning miles, bitcoin will still be awarded only after you complete your stay. And you can’t earn bitcoin for referring new users to the service.
To test out the new offer, I looked at a potential booking in San Diego this summer. I’ll need an airport hotel for an overnight layover before continuing on to Hawaii. At the time of my search, bitcoin was trading at $870 per coin.
My usual choice is to earn American AAdvantage miles. Looking at the Four Seasons by Sheraton, I could pay $139 and earn 450 miles for one night, or there was also a Double Up rate available for $142 (the AAA price) that earned 350 miles. Double Up rates guarantee that you’ll earn your elite benefits and status when you stay at the hotel, just as if you booked directly through SPG.com in this case. Read my earlier review for more information on the value of Double Up.
Since I’m a status whore, I would definitely pay the extra $3 and give up 100 miles to know that I’m getting my SPG status. I value AA miles at about 2 cents each, so those 100 foregone miles are worth about $2.
But what if I picked bitcoin? You can change you earning option without leaving the results page by using the menu on the sidebar. The same room would earn me 0.0131 bitcoins if I booked the cheap $139 rate with no status. The Double Up rate at $142 and guaranteed SPG benefits earned 0.0102 bitcoins. At an exchange rate of $870, that meant I was being offered either $11.40 or $8.87 depending on the rate I picked, a difference of $2.53.
In either case the offer is 22% less for picking the Double Up rate (PointsHound gets a smaller commission on these bookings because you keep your elite benefits). But the bitcoins are still worth more than I value AA miles.
If you know you can get a high value award ticket, you’re still probably better off with miles. But if you want an easy way to earn some bitcoins and put your toes in the water, this opportunity might work for you. Also, since PointsHound has no plans to offer a real cash back option (in US dollars) acquiring bitcoin and selling them on the open market may be an alternative.
Or don’t trade them in for cash at all! One couple has traveled the world using only bitcoin for payment. Pointista shares a couple of travel websites that accept bitcoin, including CheapAir.com for booking flights and Gyft.com for buying store brand gift cards. It will be interesting to see if banks ever start offering a credit card that offers bitcoin rewards instead of points and miles!