CONTENTS

Introduction
This document is a continuation on from the previous whitepaper, which can be viewed from the
following link - https://capcoin.net/assets/pdf/Capital%20Coin%20Whitepaper%20v1.pdf

A few weeks after the initial whitepaper release, an announcement was made about the development
of a decentralized cryptocurrency marketplace. There was no content from the previous WP making
reference to this platform, so it understandably created a lot of unanswered questions that would
need closure before release. This paper will cover all of the core features and
mechanics behind the aforementioned platform and how it will create value within the
cryptocurrency ecosystem.

Reasoning
The previous WP outlined the advantages CAP has over masternode coin competitors when it comes
to fungibility. Most projects use the basic privacy aspects of DASH and PIVX (e.g. DarkSend or
coin obfuscation to mix coins) for reducing traceability during transfers. With CAP, this aspect is
removed completely through the integration of Zerocoin Protocol. Rather than just simple coin
mixing, zero knowledge proofs are sent through the blockchain to break any connections that could
be made between the sending and receiving agent during a transaction.

A marketplace that supports CAP as the leading currency of exchange, gives an opportunity to put
these superior privacy properties to use. Additionally, the development of a partially regulated
platform for commerce, coincides with our Libertarian philosophy to conduct free trade with little to
no rules constricting the parties involved.

The flaws of a completely decentralized marketplace

Unlike other projects, we have opted to develop a semi-decentralized marketplace over fully
decentralized.

There are a number of disadvantages that come with running a completely decentralized
marketplace. Firstly, an inefficient resolution process is created as a consequence of adopting a
system where there are no proper intervention checks in place. For example, the OpenBazaar
marketplace uses the multi signature aspects of a Bitcoin wallet to allow involvement of 3rd parties
in a transaction process. Usually this takes the form of a moderator to resolve any potential conflicts.
Not only does this remove the trustless element that comes with the purpose of decentralization,
but also means putting faith in an unelected 3rd party to make an informed and fair decision on the
dispute.

The CAP dispute resolution system involves using community governance to elect paid moderators.
This is used in conjunction with an integrated marketplace feedback system that allows for
moderators to be rated based on their performance. Any string of negative feedback in a short space
of time calls for the blacklisting of a particular mod.The elections will take place on a publicly
displayed website voting page. The first round of voting will see the election of 4 moderators.
A second disadvantage to adopting a completely decentralized and censorship resistant protocol
is the inevitable proliferation of illicit activity. Anyone can run a remote node on OpenBazaar and
become a willing participant in illegal trade .The implication of adopting immutable, peer to peer
technology is that there is no way for the developers to completely prohibit such activities from
taking place. They can take steps to mitigate the process through stopping the index of certain
pages, but the content from the marketplace can never be removed completely.

The advantage of the CAP marketplace is that we can remove and control any activity that is
deemed illegal. The consequence of hosting a platform that indirectly supports illegal content is
potentially compromising its longevity. The Silk Road founder did not intend for his marketplace to
become a hotspot for selling narcotics online, but all of the conditions were present for these types
of sellers to congregate and that’s what eventually occurred. Ultimately, the platforms tenure was
cut short to a few years after the server HQ and alleged home of the founder was raided by the FBI.

To take action against sellers that are breaking the terms and conditions of the marketplace, a report
button has been placed by each product. By clicking on the button, a user is taken to a page where
they can disclose the nature of the violation and a moderator/ team member will be on hand to
review the offense. All restricted and prohibited items can be viewed from our FAQ page.(
.

The third issue that can be associated with a decentralized marketplace is the Sybil problem. By
running a completely anonymous protocol, it incentivizes bad actors to abuse and distort the
feedback system in place because there are no obstacles needed to circumvent multi-voting.As a
result, users can create unlimited accounts and mass upvote bad sellers.The ramifications of this
being that it would be impossible to tell legitimate from non-legitimate sellers in the long run.

With an account based system, the barriers to creating a large amount of accounts are significantly
higher, making the system more secure and less susceptible to potential abuse. Some obstacles have
put in place to mitigate an unreasonable amount of multi accounting. All users will be required to
verify their email upon signing up and temporary mail providers have been banned. In addition to
this, 2 factor authentication is mandatory for participating in the feedback system. The third major
obstaclet that prevents mass account farming is that a logged IP can only create a finite amount of
accounts within a certain time period.

Feedback System
One of the more crucial aspects to a functioning marketplace, is the role of an efficient feedback
system that can distinguish good from bad sellers.

The CAP marketplace uses multiple criteria to formulate the user experience of a buy and sell.

The process of the sale from initial order to post-delivery can be broken down into several key
segments:
 Seller Feedback Criteria

*Delivery - The general speed of the delivery.

Did the item arrive before/after the expected
time arrival?

*Accuracy - Is the item a reflection of what was

advertised by the seller? Did the description
mislead the buyer in any way?

*Quality - Is the item functioning as its supposed to?

What condition did it arrive in?

*Customer Service - Was the customer service

friendly and how quick were they in
responding to queries?

*Packaging - Was the packaging used sturdy enough

to protect the item(s)?

One way in which the CAP feedback system expands over competitors, is the ability to depict the
feedback data in full. The integration of a radar chart allows for users to easily assess the strengths
and weaknesses of a particular seller. Come Q4, there will be a comprehensive seller dashboard to
view a users sale performance in full.

The second core component to a feedback system, is the vendors level of experience. To simplify
the process, the marketplace avoids the use of general rankings and instead utilizes levelling
between 1-10, with 1 having made the least sales and 10 being the most frequent sellers.

Resolution of Disputes
A big advantage to using Ebay over other platforms, is its ability to resolve disputes in a timely and
efficient manner. The partnership between Ebay and PayPal can be attributed as a big contributing
factor to their high success rate in resolving disputes; Ebay’s flexible refund policies make transfers
easy to reverse. The immutability of the blockchain makes it impossible to tamper with previous
transactions, thus adding any element of insurance to buying item(s) is made much more difficult.

The OpenBazaar platform made use of moderators to resolve disputes. In theory, the process works
by a a trusted 3rd party receiving the funds of a buyer from a multisignature address. Upon the
buyer receiving the item, the escrow seller is then given the green light for the BTC to be released.
A major issue that arises from this method is assuming the moderator is a trustworthy
intermediary. The users of OpenBazaar were being increasingly exploited, in what was described by
the core developers as a “micro exit scam” from collusion between sellers and corrupt moderators.
This involved communication between the seller and moderator to lure unsuspecting buyers into
disputes. The moderator would then be able to claim the funds from the multi signature address
and release it to the corrupt seller. Only after the introduction of “verified moderators”, where the
appointment process was vetted more strictly, did the marketplace see a substantial drop in the total
amount of mod driven scams.
As elucidated with the OpenBazaar moderator program, without the correct fiduciary disincentives
in place, there is a greater risk of mods turning into bad actors. The introduction of surety bonds to a
moderators contract is one way in which monetary responsibility could be enforced.

The CAP team has structured a 2 tier moderator system, so that there is an appropriate level of
accountability held and incentives in place to prevent the formation of bad actors. There is no
hierarchical structure based on the method of gaining moderator status.

There are two ways to become a moderator. The first way is through election via a community vote.
This entails putting up a description about yourself and any relevant links to business profiles &
social media. A vote open to the public is then conducted on the website, lasting for approximately 2
weeks.The prerequisites for becoming mod from voting, include being a member of the official CAP
Discord and displaying all social media links publicly. A total of 4 moderators will be added through
this method.

The second way to become a CAP moderator is through putting up collateral, which can then acts as
a suitable incentive against committing bad behavior. The process works by sending $250 worth of
cryptocurrency to a secure smart contract, There is a lock in period between 1-3 months, in which
the moderator must accumulate a certain amount of positive feedback points to gain official long
standing status. If the demands are not met, then the funds are returned, along with a small
compensation payment for the time worked. In the situation that the minimum threshold is met, the
funds are released, a full salary paid and the mod is granted permanent privileges.

Deposits & Withdrawals

Transferring money in and out of the marketplace is instant with the CAP marketplace This
contrasts to the likes of Ebay, where the waiting period after shipping can span between 3 - 21 days.
One of the added advantages of using cryptocurrency over fiat, is that only a single buyer
confirmation is needed to release funds from the multisignature wallet. In having the system setup
as such, it negates the need for a 3rd party to verify shipping. The administrative hassle of doing so,
is the main reason why there are significant delays in the funds becoming available to the seller.

Payment Methods
Initially, just CAP and BTC will be available for goods to be bought and sold on the market.

Capital has been chosen because of its superior privacy properties, which enables a high level of
fungibility and anonymity. In order to encourage using CAP over other currencies, a 5% reduction
in fees has been enforced for the buying and selling of items.

We chose to add Bitcoin because of its popularity and strong network effects. It is sure to broaden
the scope of the potential existing user base and create accessible fiat gateways that make it possible
for anyone to use the marketplace.
Currency Support & Voting Page
One of the key features that makes CAP a truly community oriented marketplace is the ability to
vote on future currencies that can be supported on the platform.There are no restrictions based on
the codebase of the coin, the algorithm or consensus used. As stated in the specification section,
every crypto is compatible for support, but only a finite amount of currencies are available for
addition due to the instance running costs.

We have added a voting system where 2 new currencies are added to the platform on a monthly
basis. This enables cross-community participation and will bring a significant amount of outside
exposure from the plethora of voting activity created.

To add your project to the voting panel, a form must be filled out that includes a short description
and HD .PNG logo file of your chosen currency.

The first round of voting will see the integration of a third additional currency, This will be added
on the basis of developer recommendation, thus would not need to be submitted and partake in the
general round of voting.
Roadmap Extended
Q2 2018 - Early Seller Launch
Organic growth at an early stage is crucial for the marketplace to flourish over a longer timer period.
The early seller launch serves the purpose of ensuring all of the major features are working properly
and that numerous sellers are able to setup prior to public release.

Q2 2018 - Marketplace Public Release

The domain goes live and public buying & selling can officially begin. A number of discounts will
be on offer over the first month to incentivize trading on the platform.

Q2 2018 - Currency Support Voting Initiated

The first vote is conducted for the addition of 2 currencies to be accepted as a means of payment.

Q3 2018 - UI Improvements
Our prime focus is to get the marketplace live in a prompt fashion. Consequently, we have focused
on getting the core functionalities working and neglected the UI side of things.The first public
release of the marketplace will see a more simple design, when it comes to the layout, colors and
texture of the pages. However, there are plans to improve this considerably on later releases.

Q3 2018 - 5+ additional support currencies for the marketplace

More coins are added through a combination of voting and developer recommendation.

Q3 2018 - Zerocoin Protocol Integration

The CAP wallets are updated for the integration of Zerocoin Protocol.

Q4 2018 - Seller Dashboard

A detailed, comprehensive and user friendly analytics board is created for sellers to compare
multiple metrics of information regarding their sales. Some of the metrics added for comparison,
will include demographic information, buyer feedback and store page visits.

Q4 2018 - Android Lite Wallet

The compiling of an android wallet, so CAP coin users can track their holdings on an android
device.

Q4 2018 - Creation of moderator bonds through smart contracts

Those interested in a moderator position are given the chance to participate through submitting a
collateralized loan, in exchange for becoming a verified moderator. The smart contract creation
process to make this happen will be developed in Q3 and released in Q4. Until this point, all
moderator positions will be determined through the electoral process.

Q4 2018 - Mobile Optimization

The UI is made more visually appealing on mobile devices.
Creating a truly decentralized marketplace that runs peer to peer, involves using relatively unknown
networking protocols, like IPFS and IPNS. These technologies remain in their infancy and are big
contributors to why navigating through OpenBazaar can be so tedious and sluggish. In terms of
practicality, it is unlikely that they will ever become mainstream. Additionally, the technological
requirements to become a vendor and start selling on the platform are high enough to put off less
tech savvy users.The reality is that these platforms of commerce are unlikely to ever gain traction in
the long run because people will be looking for simpler alternatives.

The CAP platform takes the best aspects of decentralization and combines it with the heuristics of
using a centralized platform. It has: a superior GUI, a comprehensive FAQ, a 2 tiered moderator
based governance feedback system, virtually feeless trading, instant deposits & withdrawals,
prohibition of the buying/selling of illegal goods & services and support for unlimited currencies.
More similarities can be drawn between the likes of Ebay and the CAP marketplaces, when it comes
down to the features on offer and the insurance system used. Rather than appealing to a niche set of
users, the CAP marketplace is being made simple enough for mass adoption.

Furthermore, the marketplace will attach a mainstream working product to the coin. Only a very
small fraction of projects are able to boast a product reaching mainnet within 6 months of launch.
However, this doesn’t mean there are any plans to stop improving the marketplace.We will be
constantly tinkering with the product to ensure that it can adapt and reflect community suggestions
in full. As shown with our updated roadmap, we plan to add a vast amount of features that will
make it competitive with the likes of SysCoin, Phore Coin, OpenBazaar and their fiat counterparts,
Ebay and Amazon.