CoinTap Whitepaper

1 Abstract

CoinTap introduces a system for creating physical precious metal coins with embedded cryptographic chips that enable trustless verification and digital trading. Each coin contains an NFC chip with a unique, non-extractable private key that signs cryptographic challenges, proving authenticity without requiring trusted third parties.

Ownership of each coin is recorded on a public blockchain (Arbitrum One), allowing instant, global transfers. The combination of physical precious metal value with blockchain-verified ownership creates a new asset class: precious metals that can be sold as easily as cryptocurrency, while remaining tangible assets the owner can physically possess.

2 The Problem

2.1 The Precious Metals Dilemma

Gold and silver have served as stores of value for over 5,000 years. They offer protection against inflation, currency devaluation, and financial system instability. However, physical precious metals suffer from significant practical limitations:

• Authentication is expensive and slow. Verifying precious metal authenticity requires professional assays, X-ray fluorescence testing, or destructive testing. This costs money and time.
• Counterfeits are sophisticated. Tungsten-filled gold bars, gold-plated counterfeits, and fake bullion products proliferate. Even experienced dealers can be fooled.
• Selling is friction-heavy. Finding a buyer means visiting dealers, accepting below-market prices, and trusting the transaction will complete fairly.
• Trading is slow. Transferring physical metals requires shipping, insurance, and delays measured in days or weeks.
• Storage creates counterparty risk. Vault storage means trusting a third party. "Paper gold" products (ETFs, certificates) may not be fully backed.

2.2 The Cryptocurrency Gap

Cryptocurrencies solved the digital trading problem, Bitcoin can be transferred globally in minutes. But cryptocurrencies lack intrinsic physical value. They're backed by network effects and scarcity, not tangible assets.

This creates a gap: investors who want the liquidity of crypto AND the tangible backing of precious metals have no good options.

2.3 Existing Solutions Fall Short

3 The CoinTap Solution

CoinTap creates physical precious metal coins with embedded NFC chips that enable:

• Instant verification. Tap your phone to cryptographically prove authenticity.
• Digital trading. Buy and sell on a global marketplace, 24/7.
• Flexible custody. Hold the metal yourself or store in an insured vault.
• Tamper evidence. Destroying the chip destroys the digital value linkage.

3.1 How It Works

Each CoinTap contains a cryptographic NFC chip embedded in the metal during manufacturing. This chip uses asymmetric cryptography (ECDSA) and contains:

• A unique 7-byte hardware ID (UID) burned at factory
• A private key generated on-chip that can never be extracted
• ECDSA digital signature capability (same algorithm used by Bitcoin/Ethereum)
• Hardware security features including active shielding against attacks

3.2 Batch Verification

NFC reads one coin at a time due to the nature of the technology. However, the CoinTap app supports batch verification mode where you can quickly scan multiple coins in sequence. The app maintains a running tally and generates a combined verification report showing all scanned coins, their total value, and ownership status. This is useful for auditing collections or verifying inventory.

3.3 The Ownership Model

Each CoinTap is represented on-chain as an ERC-721 NFT on Arbitrum One. The NFT contains:

• Chip UID (links physical coin to digital record)
• Metal type, weight, purity
• Mint date and serial number
• Current owner's wallet address
• Complete ownership history

The physical coin and the NFT are linked by the chip's cryptographic identity. Owning the NFT means owning the coin. Transferring the NFT transfers legal ownership.

4 Technology Architecture

4.1 Hardware: Secure NFC Authentication

We selected our NFC authentication chip for its security features:

• Common Criteria EAL6+ certified. One of the highest security certifications available for embedded ICs.
• Asymmetric cryptography (ECDSA). Private key generated on-chip, never leaves the secure element.
• Dynamic signatures. Each tap generates a unique, verifiable cryptographic signature.
• Server breach immunity. Only public keys stored on backend—useless for creating fakes.
• Hardware security. Active shielding against side-channel and fault injection attacks.
• Industrial temperature tolerance. Survives the embedding process and operates in a wide range of environments.
• No battery required. Powered by NFC field from reader device.

4.2 Blockchain: Arbitrum One

We chose Arbitrum One for the ownership registry:

• Low fees. Fractions of a cent per transaction.
• Fast finality. Transactions confirm in seconds.
• EVM compatible. Standard Solidity contracts with familiar tooling.
• Ethereum security. Inherits Ethereum's security via optimistic rollup with fraud proofs.
• Largest L2. Highest TVL of any Ethereum Layer 2, supported by all major wallets.
• Decentralized governance. Governed by Arbitrum DAO, not a single company.

4.3 Cross-Chain Compatibility

While Arbitrum One is our primary chain, CoinTap NFTs can be bridged to other networks:

• Native Arbitrum Bridge. Transfer to/from Ethereum mainnet.
• Third-party bridges. Services like LayerZero, ChainPort, and LI.FI enable transfers to Base, Optimism, Polygon, and 30+ other chains.
• Marketplace access. Trade on OpenSea, Blur, and other marketplaces that support Arbitrum.

When bridged, the NFT is locked on the source chain and minted on the destination. The physical coin's chip identity remains constant—only the on-chain representation moves.

4.3 Smart Contracts

The CoinTap system uses four primary smart contracts:

All contracts are open source and verified on Arbiscan.

5 Security and Longevity

5.1 Tamper Resistance

The CoinTap security model assumes attackers will try to:

• Clone chips to create counterfeits
• Extract private keys from chips
• Remove chips and implant in counterfeit coins
• Manipulate the blockchain registry

Defenses:

• Chip cloning: Cryptographically impossible. The chip's private key is generated in a secure element and can never be read—only the chip itself can sign with it.
• Key extraction: Would require destroying the chip with sophisticated lab equipment. EAL6+ certified hardware is specifically designed to resist such attacks.
• Server compromise: Backend only stores PUBLIC keys. Even a complete server breach gives attackers nothing useful—signatures require the private key on the chip.
• Chip removal: The chip and antenna are embedded in a way that destruction is likely during removal. Weight verification catches replaced chips.
• Blockchain manipulation: Would require compromising Arbitrum's fraud proof system and Ethereum's security. Economically impractical.

5.2 Chip Longevity

The authentication chip is designed for extreme durability:

• Data retention: 50+ years under normal conditions
• Read cycles: Unlimited (passive NFC, no battery to deplete)
• Read cycles: Unlimited (passive NFC, no battery)
• Temperature range: Wide industrial operating range
• No moving parts: Nothing mechanical to wear out

The chip is encased in protective materials and embedded within the metal, shielding it from physical damage, moisture, and electromagnetic interference. Under normal handling and storage conditions, the chip should outlast the owner.

5.3 Chip Replacement Policy

If a chip fails due to manufacturing defect or non-tamper damage, CoinTap offers a replacement program:

1. Verification. Owner submits the coin for inspection. We verify ownership via blockchain records and confirm the chip failure is not due to tampering.
2. Destruction. The original coin is melted down under documented conditions. The old private key is permanently destroyed since it cannot be extracted anyway.
3. Re-minting. A new coin is minted with the same metal weight and purity. A new chip with a new private key is embedded.
4. Token swap. The old NFT token is burned. A new token is minted to the same owner with the new chip's UID. The new token references the old serial number in its history.

The replacement coin will have a different serial number and chip identity. Total supply remains unchanged since we burn one token and mint one token. A replacement fee covers processing costs.

6 Custody Options

CoinTap offers flexible custody to match your preferences:

6.1 Self-Custody

Take physical possession of your coins. Store them at home, in a personal safe, or anywhere you choose. You have complete control with no counterparty risk. The blockchain records your ownership regardless of where the physical coin resides.

6.2 CoinTap Vault Storage

For those who prefer professional storage, CoinTap operates secure vault facilities with a key advantage over traditional precious metal storage:

Vault features include:

• Verifiable custody. Request a proof-of-possession scan at any time. The vault scans your coins and publishes the cryptographic proof on-chain.
• Full insurance. Vault-stored coins are insured against theft, damage, and loss.
• Trade without shipping. Coins in the vault can change ownership without physical movement. Buyer and seller complete the transaction digitally.
• Withdraw anytime. Request your coins shipped to you whenever you want. No lock-up periods.

6.3 Third-Party Vaults

As the ecosystem grows, certified third-party vault operators can join the network. Each must meet security standards and integrate with the CoinTap verification system. This creates a competitive market for storage services while maintaining verification standards.

7 Marketplace and Trading

7.1 How Trading Works

CoinTap enables two trading modes:

Marketplace Trading (Remote):

1. Seller lists coin at desired price
2. Buyer purchases and funds go to escrow smart contract
3. Transfer window opens (default: 7 days)
4. Seller ships coin to buyer (or transfers vault custody)
5. Buyer verifies coin and confirms receipt
6. Ownership transfers on-chain and funds release to seller

In-Person Trading:

1. Buyer and seller meet
2. Buyer taps coin to verify authenticity and ownership
3. Parties agree on price
4. Seller initiates transfer on-chain
5. Buyer confirms with wallet signature
6. Exchange cash or crypto directly

7.2 Fees

8 Token Economics

8.1 No Governance Token

CoinTap does not have a speculative governance token. The value is in the coins themselves: physical precious metals with cryptographic verification.

8.2 Coin Pricing

CoinTap prices float based on:

• Metal spot price. The underlying silver or gold value.
• Manufacturing premium. Covers minting, chip embedding, and certification.
• Market premium or discount. Supply and demand on the marketplace.

We do not peg to any oracle. Coins trade for what buyers and sellers agree upon. True price discovery.

8.3 Revenue Model

• Manufacturing margin on new coin sales
• 2% marketplace transaction fees
• Vault storage fees (for those who use vault custody)
• Chip replacement service fees
• No ongoing fees for holding or verifying

9 Roadmap

Phase 1: Silver Launch (Q1 2025)

• Smart contract deployment and audit
• NFC chip integration finalized
• Silver coin production (1/4 oz, 1/2 oz, 1 oz)
• Verification mobile app (iOS and Android)
• Initial marketplace launch
• First CoinTap vault facility

Phase 2: Gold and Scale (Q3 2025)

• Gold coin collection launch (1/4 oz, 1/2 oz, 1 oz)
• Batch verification mode in app
• Advanced marketplace features (auctions, bundles)
• Third-party vault certification program
• International shipping and compliance

Phase 3: Ecosystem (2026)

• DeFi integrations (collateralized lending)
• Third-party minter certification program
• Cross-chain bridges
• Institutional custody solutions
• Limited edition collectible series

10 Conclusion

CoinTap bridges the gap between physical precious metals and digital assets. By embedding cryptographic chips in physical coins and recording ownership on a public blockchain, we enable:

• Trustless authentication in seconds
• Digital trading with flexible custody options
• Global liquidity for precious metals
• Verifiable vault storage with insurance
• Chips designed to last decades
• True self-sovereignty over tangible assets

The result is an asset class that combines the timeless value of precious metals with the speed and accessibility of cryptocurrency. Real metal you can hold or store securely. Digital ownership you can trade anywhere.