I'm not too familiar with your diagram, but levels 3 and 7 would both seem to apply to how consensus is maintained here.
My diagram is of the Open Standards Interconnection model - something anyone working on networks learns right away. Using words to make you sound more intelligent usually has the opposite effect. :/
Anyway, if anyone is still interested in you, you never answered how you "
always maintain the private keys to your bets and never send coins to a trusted intermediary".
Hi Vod, each bet placed in a PolyCash game is associated to a Litecoin UTXO. When setting up your own PolyCash node, you first install litecoin as a full node.
You then acquire in-game coins from an exchange or by purchasing them from another user.
The private keys to your bets are stored in your litecoin wallet.dat