I don't understand your point.
My grandfather tries to use only cash which allow 'payments to be sent directly from one party to another without going through a financial institution'.
Which every financial institution and western government keeps trying to get rid of because it is essentially impossible to regulate or police?
And which cops have a nasty tendency to seize on sight in the US if seen in any significant quantity (outside of an armored car) because ‘proceeds of crime’?
And pretty much every drug transaction, illegal sexual transaction, whatever is done in cash? To the point most major crime shows and drama shows have scenes involving some massive pile or duffel bags or whatever of cash as a plot point?
Cash on the barrel head is the textbook definition of ‘difficult to regulate’.
Also, most people buying person to person used cars and doing yard sale transactions use it too, of course.
It’s not a requirement that Cash transactions involve a crime at all. Same with crypto.
If your transaction is illegal though, using Venmo seems pretty dumb.
There is a very, very long history of that being a bad idea. There are some situations (commodity exchanges) it’s necessary, but they are heavily regulated and audited for that reason. They also have non trivial storage costs.
Gold depositories have the same issues as crypto exchanges have typically had - it’s almost inevitable that someone absconds with the actual gold without telling anyone, or ‘prints’ extra without backing assets, etc. and until someone does an audit or everyone tries to withdraw their gold/tokens/whatever, no one knows.
How you can transfer bitcoin between exactly two people with zero outside involvement from other entities? I suppose you might be able to have a bunch of pre-filled wallets of various amounts that you can transfer via thumb drive, but in a practical sense your transaction is going over various networks and through other machines.
In order for a balance to be transferred on the chain, it MUST be included in a mined block (the longest chain one/aka the primary blockchain).
So there is always a middleman, unless you’re on your own chain. But it’s distributed, no one can reliably pick who is going to be the miner (or always be the miner) because of the POW algorithm, and everyone can trust the outcome because of the way everything is structured. There are very strong incentives for everyone to try to mine, for instance, and the more mining power there is, the more difficult it is for anyone to have a controlling interest or monopoly on mining, barring special economies of scale in mining hardware, anyway. (Which do exist, but not enough to make it doable to get a monopoly right now)
Worst case, the miners can ignore your particular transaction indefinitely, but the counterparty can see that too, and it would require active collusion from a very large percentage of miners to even attempt that.
I thought of a random analogy here - the block chain miners are the equivalent of a common carrier parcel service here (albeit with far stronger guarantees against tampering).
So it’s not a middleman like a bank or a payment processor. Rather a bulk processor who moves a bunch of opaque chunks somewhere for money without any particular regard for who or what as long as they get paid for it.
Cash has serial numbers for traceability, and is emitted by a central bank. That's a big chunk of a financial institution right there. Additionally, if you pay for $50, the state won't give a damn, because it's $50. Pay a company $10k in cash and every alarm will go off and the transaction will have to be notified to a financial institution. Tracfin in Europe for example, etc.
So, no, cash isn't entirely separated from financial institutions.
I didn’t say cash didn’t require institutions somewhere. Cash creation (physical), and cash into and out of the system requires institutions.
Cash transactions do not, so spending, receiving, and if one is crazy storage can be done without institutions.
That hypothetical $10k transaction for instance only sets alarm bells off if it’s an abnormal transaction for an individual account.
Someone doing a cash business is going to do stuff like that so much, it’s a drop in the bucket and no one cares. Coin shops, check cashing places, certain types of convenience stores and restaurants, etc.
If they manage the cash themselves instead of a cash drop, such as if they are a dispensary and are unbanked, a given dollar bill can circulate a very long time before touching a bank, depending on which parts of the economy it touches.
The reality is it isn’t super hard to launder funds apparently, so it ends up back in a bank somewhere soon, but with the intermediary transactions hidden.
Let’s say I buy a legal widget for $10K and I pay cash and I don’t plan to treat it as a business expense. On my side, I’m done, and any alarm that might be invoked is the problem of the seller, and probably dependent on their compliance with weakly enforced regulations.
For some classes of widget I might want a receipt, but definitely not for all. You can easily spend that much on a birthday dinner with your friends, if that’s your thing.
I don’t think anybody is arguing that cash is “entirely separated from financial institutions” but — even above $10K — it allows for the possibility (not the guarantee) of transaction privacy.
That reminds me of the excellent Econtalk episode: Devon Zuegel on Inflation, Argentina, and Crypto
Devon Zuegel talks with EconTalk host Russ Roberts about the crazy world of money and finance in Argentina. When inflation is often high and unpredictable, people look for unusual ways to hold their savings. And when banks are unreliable because of public policy, people look for unusual ways to keep their savings safe and to make financial transactions. Welcome to Argentina, where Zuegel finds surprising applications of cryptocurrency for solving problems.
