I want you to listen to the statement of the RBI Governor on cryptocurrencies. Cryptocurrency is the stand of RBI. I have spelled it out before. Our position is very clear. Cryptocurrency, private cryptocurrency or whatever name you call it. Our macroeconomic stability or financial stability. RBI policy actions in various areas, private cryptocurrency or cryptocurrencies which have currency like character. They will undermine RBI’s ability to deal with issues of financial stability.
And the investors, today it is my duty today, maybe this question was asked earlier and I said that the investors should decide that the investors who are investing in cryptocurrency should keep in mind that whoever is investing is investing at their own risk. They should also keep in mind that there is no underlying value of cryptocurrency, not even a tulip. Now as you heard thereby Governor, he said that there is no underlying value of cryptocurrency. There is no value like a tulip. Now tulip, you all know that there is a flower. Now what is the connection with tulip? Why did tulip say?
Now I will tell you. You must have heard the name tulip, but many people must not have heard about tulip mania. Now what is tulip mania? Now when we talk about history and when we talk about greed of humans, then what level can greed go to? For that, there Isa very good example, tulip mania. Now tulip mania happened in Holland. Today we call it Netherlands. So in Holland, tulip was not full. It was in Central Asia. So when tulip came in Holland, people found it very attractive. They had never seen this wild flower. So now the very rich people in Holland used to plant tulips in their gardens.
Now what happened is that people copy the rich people. So people thought that we will also show our status. We will also plant tulips in our garden and the demand for tulips increased. Now as the demand increased, what happened was that if someone wanted tulip flowers, then if he would plant from the seeds, it would take 7 to 12 years for the flowers to come. That’s why it was so expensive. But what happened later, it was seen that if we do not plant from the seeds, we plant tulips directly from the bulb. So where it was taking 7 to 12 years, now within a year we can get a full flower from the bulb.
So the demand for this bulb has increased so much and its demand has increased so much, you think how much can a flower cost? How much money will a person give for a flower? I will tell you. At its peak, we are talking about the 17th century, specifically from 1634 to 1637, the bubble that came, the price of a flower in it was equal to 4000 gold coins. Now, if you plant according to that time, then according to today, you can see that there was a gold coin around 150 dollars. So we are talking about Florence, which was the currency of Italy, so at that time the actual currency of gold was running.
So 4000 is an average, if you calculate 4000 gold coins from this and according to 150 dollars, then 450 million,450 million had become one flower and the normal flowers were also sold for 30 to 35 lakhs, which was more expensive than the flowers at that time. Now, he said this thing and you understood that tulip mania happened.
What happened after this, the marts that were dealing on tulips, they got listed on the stock exchange of Amsterdam and then derivative trading started happening, leverage trading started happening. People did not have money, but on credit, they took a loan that we cannot afford as much as we can, but the rate will increase in the future, we will repay the loan. They did derivative trading on tulips and then what happened, once the price got so high and after that there was no buyer and when the market started crashing, then no one was ready to give a quarter of the money that people had invested to buy that tulip. So here a very big crash has come in history.
So the RBI Governor is relating this to the tulip mania that happened, which means madness. So what happened in tulip manias happening in the cryptocurrency world? Now, on one side, orbit Governor is saying again and again that you should invest money on your risk. Heist saying that for India’s macroeconomics and financial stability, cryptocurrencies area threat and on the other side, what we see is that the government is also bringing a tax of 30% here.
The government also needs money. On one side, Nirmala Sitaraman is saying that tax will be imposed, TDS will be cut and GST planning is also going on and one more thing that you were asking in the last blog that when we talk about tax on crypto, you know that according to the new budget, you have to pay 30% tax on the gains of the cryptocurrency. If there is a loss in the cryptocurrency, then no tax is made. First of all, it was your question, if there is a loss, then there is no tax.
Tax is only on gains. If there is a profit, then tax will have to be given and on the profit, if you were investing 10,000and it has become 20,000, then you have to pay 30% plus surcharge and chess on 10,000 rupees, but when we talk about stocks, if we have a loss, then you can only square off the loss of crypto with the gain of crypto, but before that, if you have short-term capital gains, then you can square off with any other asset. Why did I tell you? Because there were doubts, so I cleared the doubts. So now I am telling you that on one side, the government wants to take tax, on the other side, the RBI governor is saying that there is a risk for our financial stability.
So what do you guys think, what is right? What do you think? So do tell using the comments. Now one thing has happened, now the second question of people is that when the government said that 30% tax will be imposed, people said that this tax is too much, reduce it, at least 15% would have been understood, but when the tax came, people thought that it is good, now it is not illegal. If we are talking about digital assets, then people were thinking that I don’t know what will happen, it is not illegal and we are not doing illegal transactions, so it is understood that it is not illegal.
Tax has been imposed, so we are not calling it illegal now. And at that time, for some time, you felt that the whole market was green inside the market, but despite that, why did it happen that now all the coins you are seeing, the whole market is crashing, why is this happening now? Okay, the RBI governor said that we understood this. Second thing, now you must know about Ukraine and Russia. If you watch the news regularly, then there is dispute between them, so no agreement has come forward yet.
So what happens is that whenever there is a dispute between country or a country, it becomes a warlike situation, then at that time, all the financial markets are impacted. So now people are seeing an impact on the stock market and now money has been invested in crypto, so this has also become a financial market. So it also Hasan impact on the stock market. Along with this, if we talk about inflation, then the data that has come out, it is being reported in the US that 7.5%inflation has come, the inflation has increased by 7.5%, which has not happened in the last 40 years.
I mean, the inflation has increased so much. I told you before that thus is continuously printing notes. In fact, India has also printed notes and when you print this much currency, inflation will come and 7.5% has been reported. And now what is it? Althea institutions that had their interest rates here were very low and inflation is so high. I mean, if you are keeping money in the bank or taking a loan, then the interstate is very low there adhere inflation is very high, so people are suffering overall loss. In such situations, you see an instability in the financial markets and this has been reported.
In fact, there will be more inflation than this, it can be up to 10 to 15%, so this is the report of inflation. You are understanding that there is a dispute between Ukraine and Russia and in our own government, on one side, tax is being talked about, on the other side, itis being said that it is risky, so a lot is going on in the market and because of that, if you see now, if you check the fear and greed index, then you will understand that fear has increased. When fear increases, then at that time, you will see that the price of assets and in fact of stocks in the stock market is going down and crashing.
So how long will this be until all these things are there, you do not get a little clarity. First of all, we have not received any law on cryptocurrency in India right now. Neither has the government banned it nor has it regulated it. So now only the tax has been talked about. So on the one hand, people have understood that it is not illegal. On the other hand, there is a lot of inflation here.
If there is instability in the overall financial markets, then the difference will be in crypto. And if you are finding out here, then you will that this is not just a matter of two countries. Many countries will support Russia, many will support them, and in fact, many countries of Europe are involved in it, so it will have an impact on the overall world. Now, if there is any such situation, I told you that it Hasan impact on every market.
