It's obvious that nobody would do that manually. It could be done with software tools. But you're absolutely right in that the tax laws make it absolutely useless as a currency. And yes, so long as handy software tools do not exist for tracking tax liabilities, it can be downright dangerous go about generating a large number of transactions.

I also agree on the importance of physical cash. Financial privacy is a human right and I use cash every day just so to keep the ATMs around from disappearing.