Layered Scaling

There are at least two stages to any transaction – agreement and execution. A final settlement system executes previously arranged agreements in a final, unchangeable fashion. By contrast, ‘handshake aggregators’ such as Visa, MasterCard and PayPal are trusted to collect agreements on a larger scale, package them together into fewer transactions of higher economic capacity and then conveniently settle the aggregates later on.

Handshake aggregators funnel the arranged agreements in an electronic and legal way to the US dollar final settlement system by collecting, reconciling and communicating packaged agreements to the banking system. Final settlement systems require ‘layered’ solutions to accommodate the daily transactions required for its accompanying asset to become an adopted medium of exchange.

Layering occurs when higher-level aggregators make use of lower-level settlement systems. Bitcoin uses a similar structure of aggregators to achieve near-unlimited commercial transaction capacities. These layered solutions transact in bitcoin the asset, but only require sparing use of the bitcoin blockchain for final settlement.