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In this paper, we analyze the capacity of a molecular communication channel in a one dimensional environment where information is represented with molecules that are released by a transmitter nanomachine, propagate via Brownian motion, degrade over time, and stochastically reach the receiver nanomachine. The channel is modeled as a time slotted binary channel, and two modulation schemes are proposed: a naive modulation scheme and an extended modulation scheme with a redundant number of molecules. Our analysis demonstrates that the channel capacity is largely affected by the life expectancy of molecules. Our analysis also indicates that the extended modulation scheme can achieve nearly one bit per slot at the expense of extra molecules under optimal conditions.