In order to test Layer 2 solutions in practice, a proof of concept of a use case suitable for these technologies can be proposed.

The application simulates a possible architecture implemented by a supermarket chain to enable customers to pay with cryptocurrencies.

The factors under analysis for each Level 2 option are as follows:

- The effort the store would have to make to implement the solution, both in terms of software engineering effort and cost

- Usability for customers

- Economics of tokens.

Basically, this example application involves the creation of a parallel payment system to the pre-existing ones.

It thus falls under the case of micro-payments, which were described in the article here.

The term usability refers to the combination of two main aspects: ease of use for customers and cost per transaction.

Regarding performance, an analysis in terms of throughput (TPS) is not sufficient here: transaction latency, i.e., the time each individual user has to wait for his or her payment to be confirmed by the underlying architecture, must also be considered.

Indeed, a payment method that implies an average confirmation time of, say, 10 minutes, is not usable (!!) in a retail context.

While the economy of the token falls under those factors that allow the merchant to not consider cryptos simply as “Monopoly” coins.

The commitment that the store would have to make to implement the solution

In order to launch the initiative, suppose that Supermarket Briegel ltd makes tokens with Takamaka technology, Briegel ltd Tokens (BT), that can be exchanged for goods (from the Supermarket) and services (delivery) in its stores and on its platforms.

To implement these services Briegel ltd will need:

- SDK to be integrated into the ‘app and web portal for token management.

- Access to Red Token (TKR), the native stablecoin of the takamaka blockchain.

- The network on which to interface to exchange BTs.

Assuming each BT is worth $1, Briegel ltd will require AiliA to issue 10,000 BTs.

To do this it will purchase 10,000 TKRs to cover the release of the tokens plus an additional 200 TKRs for the use of the exchange network on which the BTs will circulate. Basically the gas fess.

The interface software and SDK are free tools released by Takamaka Technology because they are completely open source.

Usability for customers

Ideally, the tokens are meant to be likened to cash.

The customer obtains BT Tokens in exactly the same way as he obtains vouchers from a “points” campaign, in the electronic wallet of his cell phone, directly distributed by the Briegel company via the app shared among all stores in the Briegel ltd. chain.

These tokens are comparable to money and will always be spent within Briegel ltd. stores.

So to receive the tokens, the user must register his or her public key within the Briegel ltd site or show the QR of the same [public key] at the checkout.

Anyone with the tokens and the app (or equivalent implementation) can exchange them with other users simply by knowing the public key.

Token interaction occurs off-chain (off-chain) thanks to Hotmoka, which allows near-instantaneous transactions.

BT tokens can be fragmented and transferred freely by various actors. It is also possible to generate non-divisible tokens to link them to inherently indivisible objects.

All exchanges will be traceable by determining a level of network transparency that can be decided for each token. Ideally a user should always have access to all exchanges involving his or her public key.

However, to access this data the user must perform a request transaction that proves possession of the private key, safeguarding the integrity of its Privacy.

Economy of tokens

As for the economic management of BT Tokens, these are covered by the equivalent value in TKR, which is always worth $1. Thus, when they are spent by customers, the store administrator can perform registration with AiliA SA and receive the dollars/euros or other FIAT currency immediately.

Any remaining tokens can be converted back to TKR and then to FIAT, or used to create new BT tokens. This greatly simplifies the management of budgets and refunds.

Per i Token BT se collegati ad un metodo di pagamento veloce, tipo carta di credito, l’esercente può chiedere in qualunque momento la conversione FIAT e ottenere il profitto dovuto.

Ma attenzione perché solo i soggetti autorizzati possono uscire in TKR e poi in FIAT, opzione che, in questo caso, spetta solo a Briegel ltd.

Final question.

Could the manager track how these tokens are spent, providing transparency and control over how and when BTs are used, leveraging Takamaka technology ?

Certainly yes !

Stay tuned.