The whole reason that Bitcoin has smart contracting is to enable this kind of scalability without compromising the security. After all, all that fancy decentralized stuff wouldn't be useful if you had to go use a centralized server (or abandon security) to make use of it.
Imagine you, me, and some of the other posters here decide we'd like to transact efficiently amongst ourselves without the resource expenditure of telling others about our transactions but we don't trust each other, so we establish a set of rules about the records we need to keep when doing so. If there is never a dispute great! But if there is a dispute, we take our agreement and our transaction records and head off to court to settle the dispute.
To apply that to Bitcoin: the rules and records get made machine interpretable. Transact as you like, and if there is a dispute you take the relevant records to the blockchain and it enforces according to them. Because the enforcement is automatic and untamperable there isn't any reason to cause a dispute in the first place (which creates some challenges for software Q/A)... so then when channels are used globally broadcast transactions are only needed to enroll or unenrole coins in a scheme (or in the event of a dispute or a software fault).
You could, of course, instead have some insecure trust based way of exchanging coins-- that is, after all, how all legacy banking technology works. But with Bitcoin you don't have to. The system offers a spectrum of different ways to transact, each with their own costs and benefits.
> Transact as you like, and if there is a dispute you take the relevant records to the blockchain and it enforces according to them.
This whole idea falls down once you realize that the blockchain knows nothing about what was actually transacted. Say I give you a piece of bread in exchange for 1 Satoshi, but never receive that Satoshi. A court of law can, in principle, coerce you to pay what you owe me, but the blockchain can do no such thing. Similarly, if you do pay me that Satoshi but I never give you the bread, you'll also never be able to convince the blockchain to reverse the transaction or make me give you the bread.
The ancestor post was about not needing to place every transaction directly into the blockchain, to which someone replied assuming that doing so would eliminate the security, to which I explained it did not eliminate the security. My apologies for using broad language which could be read as implying that any possible dispute could be settled that way-- that wasn't the point I was trying to make.
HOWEVER, you're not entirely correct for two reasons:
(1) There is a much wider class of transactions that can be made cheat proof than you might expect. If, for example, I were purchasing machine validable information from you that could be made resolvable https://bitcoincore.org/en/2016/02/26/zero-knowledge-conting...
(2) Even when that's not possible-- when you transact you can use excrow transactions to specify that any monotone function of additional key holders can release the funds. In the simpliest form, the transfer requires you me and an arbitrator. So you could make it so that if there is a dispute one or more other parties have to approve the outcome-- which could be a court or a private arbitrator (or some quorum of arbitrators, if you like). There the third party isn't eliminated, but it's made very flexible.
As an aside, in US legal tradition civil courts do not usually award specific performance -- I might get my money back and damages, but they won't make you give me bread you promised to give me. (2) is similarly limited, but (1) isn't if applies and you don't choose for it to be.
The whole reason that Bitcoin has smart contracting is to enable this kind of scalability without compromising the security. After all, all that fancy decentralized stuff wouldn't be useful if you had to go use a centralized server (or abandon security) to make use of it.
Imagine you, me, and some of the other posters here decide we'd like to transact efficiently amongst ourselves without the resource expenditure of telling others about our transactions but we don't trust each other, so we establish a set of rules about the records we need to keep when doing so. If there is never a dispute great! But if there is a dispute, we take our agreement and our transaction records and head off to court to settle the dispute.
To apply that to Bitcoin: the rules and records get made machine interpretable. Transact as you like, and if there is a dispute you take the relevant records to the blockchain and it enforces according to them. Because the enforcement is automatic and untamperable there isn't any reason to cause a dispute in the first place (which creates some challenges for software Q/A)... so then when channels are used globally broadcast transactions are only needed to enroll or unenrole coins in a scheme (or in the event of a dispute or a software fault).
You could, of course, instead have some insecure trust based way of exchanging coins-- that is, after all, how all legacy banking technology works. But with Bitcoin you don't have to. The system offers a spectrum of different ways to transact, each with their own costs and benefits.