Always Open Markets and Lightning Fast Events Create a Crypto Time Warp

October 7, 2018 / by Ronald Tichenor

After spending time working in crypto circles, it seems clear that how time flows in traditional markets seems terribly old fashioned.

Time in the crypto universe operates at two levels. On one, things happen around the clock, so the opportunities seem endless. On another, the nature of digital interactions is that they happen fast, so boom and bust cycles occur at lightning speed within this seemingly infinite space.

In crypto space-time, there are no business hours, no weekends, no holidays. Continent, country, time zone, province, jurisdiction — all are irrelevant. Eventually, we’ll add planet to that list.

In contrast, our existing financial world functions confined to business hours, traditionally 9 am to 5 pm, Monday through Friday, closed on the weekends and holidays, which depend on what country you’re in. These are the days and hours that markets are open, that trading takes place, that banks interact with each other, etc. These are the times we are limited to doing anything in the financial sphere.

But time in the alternative world of crypto is different.

A concept like business hours is irrelevant if I am in North America, and the entity I’m doing business with is in Asia, or Europe, or even in an indeterminate location, which is not unheard of in crypto. When deals can happen around the clock, trading hours don’t matter.

This results in a completely different view of time in crypto markets versus traditional markets. And it’s not just perception.

Events happen faster in a digital environment. This is part of what I call time compression in crypto. This article from June of 2017 explains it best, but it also demonstrates the actual phenomenon when viewed in hindsight.

Our takeaway from this is that crypto acts like other markets, if you look at it through the filter of time decompression.

A bubble or bear market can take 6 months or more to play out. How long do bull and bear markets play out in stock or real estate cycles? Years, decades even. We’re currently in the midst of a decade-long bull market in the US stock market.

In the same time frame is the entire life of all crypto markets, complete with a half-dozen bubble and bear markets and numerous mini-cycles within each of those.

For good or for ill, this is part of what the decentralization and democratization of markets looks like.

Right now it’s just cryptoassets, which admittedly are still an experiment. At this early time the markets are immature. Less regulation means more volatility and more manipulation. This seems to magnify the time effect. Eventually, just about everything will become tokenized, and markets will be more liquid. With lower costs, more efficient markets, and fewer middlemen like brokerages, banks, agencies, etc, everything will move faster and with fewer delineations between them. More stuff happens in less time.

It makes sense though, doesn’t it? If we’re shifting from stodgy, old analog systems to real-time world-wide digital markets, shouldn’t things happen faster, with less friction and with less regard to borders and barriers? For some, this will take some getting used to, and there are still many industries and systems that have yet to be transformed. When they do, hold onto your hats, and do not stand. It will be a wild ride.