A bitcoin full-node has to verify every transaction in the entire history of Bitcoin to be sure there were no double-spends. Because a single UTXO could be the result of money that passed through millions of accounts, a recipient of a Bitcoin payment has to verify millions of transactions that make up the history of the payment. Usually they just resort to trusting one of the full-nodes to do it for them.
Unlike Bitcoin and many other crypto-currencies, tokens on Intercoin don’t split (at least for v1.0) and thus there is no problem of having to keep track of an ever-growing amount of UTXOs.
Instead, each community can issue tokens in a variety of denominations, similar to how we have quarters, dimes, pennies etc. except the fractions just powers of 1/2. Because tokens don’t split, verifying the history of a token is straightforward: it passed whole through maybe a hundred accounts, but probably not millions. The entire history of the token can be encoded in the payment stored by the recipient.
When it comes time to make a payment, the sender of the money might need to “get change” by exchanging their larger denominations for a set of smaller ones. This is a transaction where both parties neither gain nor lose any monetary value, and it becomes a matching problem. The most efficient way to solve the matching problem is for each community to have one well-known virtual address (a “bot”) which stores enough change for everyone. (As long as this account never spends money on its own, but only exchanges equal amounts of money, its money won’t count towards the community’s circulating money supply.)
The way the default software works, anyone who receives a payment in a community would automatically contact that community’s bot and exchange the small denominations for larger ones, thereby limiting the growth of tokens in the system. Unlike the real world, there is no concern for physical distance between the vendor and the “change bot”. Large tokens “frozen” by the change bot can then be given out to someone else, while the change tokens are taken out of circulation. Since the virtual bot’s money supply doesn’t contribute to the circulating money supply, its account balance doesn’t need to be a bottleneck (semaphore) for the local transactions. But to speed up transactions further, some vendors may choose to hold on to the change and use it to “give change” back to their customers.
In addition, community tokens are routinely retired from circulation when a cross-border payment is made, or money is withdrawn from a community. New community tokens are issued when people deposit Intercoin into the community. So, token histories can be deleted to prevent the community ledgers from growing indefinitely.