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To establish a Web3 company, the following steps can be taken:

1. Determine the business direction of the company: Establishing a Web3 company requires defining the business direction, including market positioning, product types, target customer groups, etc.

2. Plan the organizational structure of the company: Establishing a Web3 company requires formulating an organizational structure, including the company's equity structure, departmental setup, and employee responsibility distribution.

3. Recruit suitable team members: Establishing a Web3 company requires recruiting professional team members, including technical developers, product managers, marketing personnel, etc.

4. Prepare the necessary funds for the company: Establishing a Web3 company requires preparing sufficient funds, including leasing office space, paying employee salaries, and conducting marketing promotions.

5. Register the company: Establishing a Web3 company requires registration, including determining the company name, choosing a registration location, and handling business registration procedures.

By following these steps, a Web3 company can be established.

To promote a Web3 project, I have the following suggestions:

• Emphasize content marketing: Attract the attention of target customers by creating high-quality articles, videos, images, etc., and increase content exposure through search engine optimization and social media promotion.

• Participate in community activities: Engage in various activities within the community, including forums, offline meetings, hackathons, etc., to communicate with community members and build trust.

• Strengthen brand promotion: Enhance the brand through the design of aesthetically pleasing brand logos, websites, and promotional materials.

  Cold Start: An Inescapable Startup Challenge

  The difficulty of cold starts arises because innovative entrepreneurs inevitably face numerous constraints and challenges.

  1. Resource constraints.

  "A skilled cook cannot make a meal without rice." Building a business model is an activity that requires a significant amount of resources, yet paradoxically, one of the most common issues faced by startups is relative scarcity of resources. This is why industry giants like Apple, Google, and Amazon often started in garages.

  The challenge posed by relative resource scarcity requires entrepreneurs to adopt more creative and efficient methods to solve the problems they face.

  • Lack of a foundation to persuade business model participants.

  Unlike established companies with a certain reputation, businesses in the cold start phase are still in the process of validating their business models and have not yet demonstrated the feasibility and potential of their business models, forming highly credible signals or value labels, making it difficult to attract potential consumers, users, suppliers, or investors.

  Therefore, during the cold start phase, business model innovators face two key challenges:

  1. Quickly validate the feasibility of the business logic.

  2. Confirm the value proposition and target users.

  So, how can limited resources be maximized? How can customers who are not familiar with you be persuaded to pay for your product? Professor Guo Bin offers three strategies that can certainly inspire you.

  Strategy 1: Lean validation of business logic feasibility

  On the surface, the first problem entrepreneurs need to solve is to quickly generate more revenue. However, if we compare a company's revenue to "water flow," the feasibility of the business model is the "source" that keeps the flow continuous.

  Even if the business model is logically sound, its feasibility in practice is still questionable. Only a business model that has been successfully validated through practice can truly be considered "feasible."

  In the process of validating the feasibility of the business model, entrepreneurs need to race against time for two reasons:

  First, their resources are limited, only supporting a relatively short period of trial and error (e.g., cash flow is continuously consumed);

  Second, they need to avoid others realizing the potential of these business models and quickly initiating imitation and challenges, especially from potential competitors in large enterprises.

  In this situation, lean validation of business logic becomes the only choice for business model innovators.

  • The lean model emphasizes completing trial and error at the lowest cost and the fastest speed.

  Through lean validation, it is possible to confirm the target market's acceptance and the integrity of the business model components at a lower cost and higher efficiency.

  The opposite of lean validation is the "rocket launch" business model. Rocket launches aim to achieve rapid growth at the highest cost and speed. A representative company is Webvan, a fresh produce company founded in 1996. Its pioneering "online ordering, offline delivery" business model revolutionized consumer shopping methods at the time. It attracted the attention of many famous venture capital firms such as Benchmark Capital, Sequoia Capital, and SoftBank Capital. In 1999, Webvan signed a $1 billion contract to replicate this delivery system in 26 major metropolitan areas across the U.S. However, the rapid expansion was accompanied by massive losses, and just two years later, Webvan declared bankruptcy.

  In fact, the fatal flaw of the rocket launch model is that the moment the entrepreneur excitedly presses the launch button, they lose the opportunity to steer or iterate, having to passively wait for the outcome: massive success or failure.

  In 2007, when Amazon launched its online fresh produce sales business, it chose the lean startup approach, contrary to the "rocket launch" model. Although Amazon had a better reputation, richer internal resources, and a more stable customer base, it still selected Seattle as its sole test city. Those familiar with American urban culture may know that Seattle has a higher acceptance of fresh food than most cities in the U.S., and even so, Amazon only targeted certain typical communities in Seattle with high income and high residential density. After five years of continuous trial and error and iteration, it wasn't until 2012 that Amazon Fresh entered its second city—Los Angeles, and again only served high-density, high-income communities.

  Such a low-cost investment gave Amazon the confidence to "make mistakes."

  Second, lean validation maximizes the company's options. Amazon founder Jeff Bezos has a deep appreciation for the book "The Black Swan," where the idea of optionality is one of the important underlying logics of Bezos's operation of Amazon. According to "The Black Swan," events that significantly impact the future are often unpredictable. The idea of optionality is based on this, suggesting that we need to create "options" at controllable risks and costs for future points in time, and then quietly wait for clearer decision information or signals to emerge. Amazon's strategy consistently embodies the idea of "optionality." Even if Amazon Fresh's attempt in Seattle failed, the relatively small resources invested meant that the losses were foreseeable, acceptable, and controllable; on the other hand, if these attempts succeeded, the returns would be enormous, far exceeding the upfront costs required to obtain these options.

  Strategy 2: Establish a new customer value perception

  Cultivating users' recognition of the company's value proposition is an important issue faced by businesses in the cold start phase.

  Business model innovators need to persuade target customers to pay for their products, thereby generating a continuous revenue stream. We might consider that regardless of the actual quality of the product or what pain points it is best suited to solve, the perceived value of the product to target customers is more "real" to them.

  Establishing a new customer value perception allows new business models to stand out among numerous mature products, gain more attention, and provide potential customers with a unique value perception, making it one of the optional strategies for business model innovators to overcome cold start limitations.

  1. Identify the true target customer group. With a clearer and more concrete customer group positioning, companies can more effectively provide tailored products and services. Amazon does not believe that all users with fresh produce purchasing needs can naturally become their target customers; they position their target customers as "communities in large cities with high density and high income characteristics that can accept new things." This is because the value of Amazon Fresh delivery does not solely rely on the products themselves, but also depends on how much customers are willing to pay more for the "last mile," and high-income individuals are usually more willing and able to pay extra.

  2. Further understand and cater to customers' thinking habits, also known as "mental models." A mental model refers to the value that consumers believe a product possesses, often manifesting as an intuitive response. For example, people always associate roses with love, even though the appearance of a carnation is similar to that of a rose, it will not become the first choice for Valentine's Day. Avocados have become synonymous with health, nutrition, and a trendy lifestyle due to extensive marketing and promotion. In 2010, the import volume of avocados was only 2 tons, while in 2021 it reached an astonishing 41,400 tons. The explosive growth in avocado sales is due to its close association with "high taste." In fact, the original English name for avocado was "Alligator Pear," which was later changed to the more refined "Avocado" after protests from the Avocado Growers Association. Even though these stories can be easily searched, many customers still buy avocados for their "health" and "trendy" associations, which illustrates the power of mental models.

  3. Build new value labels or new category images. If a company can change customers' perceptions and make them recognize the constructed value labels or new category images, then even selling the same products can yield differentiated effects. Tesla was not the first practitioner of new energy vehicles, but due to its success in shaping the mental model of electric vehicles in the public's mind, it has become the standard representative image of electric cars. In the early days, Tesla consciously shaped the concepts of green, environmentally friendly, and sustainability, influencing public perception through celebrities and IT elites. This shows that as long as a business model can successfully occupy the market's mental model, its probability of success will greatly increase.

  Strategy 3: Fully utilize complementary assets

  Entrepreneurs in the early stages of a cold start often find it difficult to invest sufficient funds and manpower in every aspect of transactions, making complementary assets extremely valuable throughout the transaction process. Fully utilizing complementary assets is also an important strategy to help businesses cold start.

  As David Teece said, a product needs various services such as marketing, competitive manufacturing, and after-sales support to obtain more comprehensive value, and these services usually come from complementary assets. In fact, for resource-limited business model innovators, relying solely on their own strength to eliminate shortcomings across the entire transaction chain is an impossible task. Fully utilizing complementary assets can help businesses build a more complete transaction process chain and obtain more excess returns more efficiently.

  In the early stages of building a business model, we mainly focus on two points.

  1. How to fully leverage one's advantages in areas of expertise.

  2. For the capability shortcomings exposed during the cold start phase, fully leveraging complementary assets or forming complementary strategic alliances is the most effective strategy.

  The lack of reputation or influence is also a significant factor hindering the cold start of business models. The market finds it difficult to have confidence in a new and unfamiliar entity, and not every audience is brave enough to be the "first to eat crabs."

  However, if the complementary assets utilized have a certain industry reputation, the situation changes; they can serve as a signal or endorsement to help the focal company establish attractiveness in the target market. For example, if the audience believes in the quality of Apple phones, they are likely to think that a company authorized by Apple to manufacture protective cases for iPhones must be quite good, even if they know nothing about that company.

  A Chinese startup called "YunCe" opened up the market in this way. YunCe's core capability lies in providing solutions for mobile application developers. In the early stages, when it was difficult to penetrate the market, YunCe attempted to collaborate with ARM, a leading company in the microprocessor market. Through ARM's recognition and endorsement, YunCe subsequently received cooperation invitations from large multinational companies such as Intel and Qualcomm, and secured two rounds of investment from IDG Capital, Gao Rong Capital, and Haiyin Capital, entering the 2015 Qianhai Venture50 list and becoming a star enterprise. Today, YunCe's valuation is nearly $500 million.

  Only by understanding the essence of business can one navigate the entrepreneurial journey steadily and far.

  Not only does Professor Guo Bin provide solutions for how to cold start a business model, but in his book "Business Model Innovation," he also delves into the essence of business models, dismantling the underlying logic of the business world and strategic top-level thinking, inspiring entrepreneurs to break the boundaries of thought.

  James Carse once said, "There are two types of games in the world: finite games and infinite games. Finite games are played to win, while infinite games are played to continue the game." If we can view business innovation as an infinite game, always aiming to break through ceilings, I believe you can continuously create new possibilities and greater patterns in the world of business.

  Write an ERC 721 smart contract using Solidity, with a whitelist feature.

Then, implement a function to add to the whitelist, where only the contract creator can add to the whitelist:

Next, implement a function to check if an address is in the whitelist:

Finally, in the safeTransferFrom function defined in the ERC 721 protocol, add whitelist verification, allowing only addresses on the whitelist to conduct transactions:

Creating a good public chain requires comprehensive consideration of many factors. Here are some important aspects:

1. Security: The public chain needs to have a high level of security to effectively prevent attacks and tampering, ensuring the safety of users' assets.

2. Performance: The public chain needs to have good performance to handle a large number of transactions and data, improving transaction efficiency and stability.

3. Scalability: The public chain needs to be scalable to meet the growing number of users and transaction volumes, ensuring stable development of the public chain.

4. Applicability: The public chain needs to have broad applicability to meet the needs of different types of applications and expand the application range of the public chain.

5. Governance mechanism: The public chain needs to have a reasonable and effective governance mechanism to ensure the stable operation and sustainable development of the public chain.

Additionally, creating a good public chain also requires consideration of other aspects, such as ecological construction, community building, and marketing. By comprehensively considering these factors, a good public chain can be developed.

To increase user transaction volume on cryptocurrency exchanges, the following measures can be taken:

1. Provide a rich variety of trading pairs: Offering users more trading pairs can expand the trading range and increase user transaction volume.

2. Provide quality services: Offering users quality services, including fast transaction speeds, stable system operation, and professional customer service, can attract more users and increase transaction volume.

3. Offer attractive activities: Hosting appealing activities, such as trading competitions, trading discounts, and user expansion, can attract more users and increase transaction volume.

4. Collaborate with other platforms: Partnering with other well-known exchanges or wallet platforms can expand the user base and increase transaction volume.

5. Maintain user relationships: Maintaining good relationships with users, such as promptly responding to user inquiries, providing professional advice, and listening to user feedback, can enhance user trust and loyalty, increasing transaction volume.

By implementing the above measures, user transaction volume on cryptocurrency exchanges can be increased.

How can authors of encrypted content increase article views?

To increase the views of encrypted content, authors can take the following measures:

1. Create high-quality content: By researching market demands, producing valuable and attractive content can attract more readers.

2. Establish social media channels: Create personal blogs, social media accounts, etc., and regularly publish content to increase content exposure.

3. Share content with communities: Share content with relevant communities, such as technical communities and industry communities, to let more people see your content.

4. Collaborate with other authors: Collaborate with other authors, such as mutual recommendations and co-writing, to let more people see your content.

5. Collaborate with platforms: Partner with well-known content publishing platforms, such as technical blogs and industry magazines, to gain more exposure for your content.

By implementing the above measures, the views of encrypted content can be increased.

What is a decentralized website?#

A decentralized website (Dweb) is, literally, a website deployed on a decentralized network.

From its components, Dweb is similar to traditional internet websites, requiring an entry point—a domain name—and a hosting entity—a hosting server. In the Web3 world, the representative projects corresponding to these two "functions" are ENS, IPFS, and Arweave (this article focuses on the former, which is used by many projects).

ENS (Ethereum Name Service) is a distributed, scalable, and open naming system based on Ethereum; in simple terms, it is a blockchain domain name system.

The concept of IPFS is to distribute data storage across the world on nodes that anyone can run; it is essentially a censorship-resistant, peer-to-peer data storage service. Additionally, since IPFS distributes data across nodes and points to specific data, it ensures that resources come from the most recently updated sources, making the actual experience faster and more reliable.

Regarding further explanations of ENS and IPFS,

Earlier, Vitalik mentioned in an interview: "The Ethereum Name Service ENS is the most successful non-financial Ethereum application to date, essentially comparable to a decentralized phone book."

On October 9, 2021, the Ethereum domain paradigm.eth was purchased by an unknown wallet for 420 ETH, marking the largest ENS domain transaction to date. Interestingly, the well-known cryptocurrency venture capital firm Paradigm was not the buyer of this domain.

Recently, the price of ENS has fluctuated due to users rushing to register three-digit and four-digit ENS domains, with many Chinese character domains also appearing. We noticed that on the NFT trading platform OpenSea, there are several well-known high-priced domains, such as zhifubao.eth, which was registered as early as 2017 and has a price tag of 200 ETH, approximately $315,000; another domain named amazon.eth even has a price tag of 1 million USDC, about 6.75 million RMB.

Why spend so much on a domain? What is the magic of ENS? Let's explore this most successful non-financial Ethereum application to date.

From Vitalik's description, we can simply compare ENS to a decentralized phone book, except that the phone is a cryptocurrency wallet used for cryptocurrency transactions.

ENS was initiated on May 4, 2017, by Alex Van de Sande and Nick Johnson of the Ethereum Foundation, and it issued its governance token in November 2021. ENS is a distributed domain name service protocol based on Ethereum, providing a secure and decentralized way to map simple human-readable domain names (like apple.eth) to Ethereum addresses. Specifically, ENS can map the long 42-character Ethereum addresses that we often see starting with Ox to custom short addresses, such as vitalik.eth, mirian.eth, and 九一四一.eth.

The greatest function of ENS is to replace the lengthy, complex Ethereum addresses made up of a combination of numbers and letters with simple, user-friendly, custom addresses. Therefore, in wallets that support ENS, users can directly bind various cryptocurrency addresses using ENS domain names, eliminating the need to copy and paste those long addresses.

This basic function may seem insignificant, but it actually solves a significant real-world problem. As early as 2018, a user mistakenly sent 1,493 ETH to the founder's Ethereum address, and in recent years, incidents of users losing assets due to address errors have occurred frequently. ENS effectively addresses this issue, improving transaction convenience while also enhancing security.

Additionally, since ENS is built on the ERC721 protocol, each ENS domain is also an NFT that can be traded on NFT marketplaces like OpenSea. This is likely one of the reasons for the recent rush to register three-digit and four-digit ENS domains, as some scarce and meaningful domains have certain appreciation potential.

IPFS#

Powering the decentralized internet (web3.0)

A peer-to-peer hypermedia protocol that preserves and develops human knowledge in a scalable, resilient, and more open manner.

IPFS is a distributed system for storing and accessing files, websites, applications, and data.

The underlying protocol is the Hypertext Transfer Protocol (HTTP), which is the core of the traditional web. HTTP is implemented by two programs: a client program and a server program. The client and server programs run on different end systems and communicate through HTTP. HTTP defines the structure of this data and how clients and servers interact.

Web pages consist of objects, where an object is simply a file, such as an HTML file, a JPEG image, or a small video file, and they can be addressed via URL. Most web pages contain a basic HTML file and several referenced objects.

HTTP defines how web clients request web pages from web servers and how servers transmit web pages to clients.

The browser's job is to execute and parse the HTTP protocol and front-end code, then display the content. When submitting a query, it typically queries its database and returns the results to the requester, which is the browser, and then the browser displays it.

Using the internet operates under the HTTP or HTTPS protocol. The HTTP protocol, which is the Hypertext Transfer Protocol, is used to transfer hypertext from web servers to local browsers. Since its introduction in 1990, it has been 32 years, and it has played a significant role in the explosive growth of the internet, contributing to its prosperity.

However, the HTTP protocol is based on a centralized communication protocol under a client-server architecture, which has many drawbacks.

1. Data on the internet is often permanently erased due to file deletions or server shutdowns. Some statistics show that the average lifespan of web pages on the internet is only about 100 days, and we often see "404 errors" on some websites.

2. The efficiency of the backbone network is low, and the cost of use is high. Using the HTTP protocol requires downloading complete files from centralized servers each time, which is slow and inefficient.

3. The concurrency mechanism of the backbone network limits internet access speed. This centralized backbone network model also leads to congestion during high concurrency situations.

4. Under the existing HTTP protocol, all data is stored on these centralized servers, and internet giants have absolute control and interpretative power over our data. Various forms of regulation, blocking, and monitoring significantly restrict innovation and development.

5. High costs and vulnerability to attacks. To support the HTTP protocol, large traffic companies like Baidu, Tencent, and Alibaba invest substantial resources to maintain servers and security risks to prevent DDoS attacks. The backbone network is also subject to interruptions due to wars, natural disasters, and central server outages.

IPFS's Solutions#

1. IPFS provides a historical version rollback function for files, allowing easy viewing of historical versions, and data cannot be deleted, ensuring permanent preservation.

2. IPFS is based on a content-addressed storage model, meaning identical files are not stored redundantly. It compresses excess resources, including storage space, thereby reducing data storage costs. If P2P downloading is used, bandwidth usage costs can be reduced by nearly 60%.

3. IPFS is based on a P2P network, allowing multiple sources to store data and enabling concurrent downloads from multiple nodes.

4. Built on a decentralized distributed network, IPFS is difficult to manage and restrict centrally, making the internet more open.

5. IPFS's distributed storage can significantly reduce dependence on the central backbone network.

In summary:

HTTP relies on centralized servers, making it vulnerable to attacks, and when traffic surges, servers are prone to crashes, resulting in slow download speeds and high storage costs;

In contrast, IPFS uses distributed nodes, making it more secure and less susceptible to DDoS attacks, not relying on the backbone network, reducing storage costs while providing ample storage space, faster download speeds, and the ability to check historical file versions, theoretically allowing for permanent storage.

New technologies replace old technologies for two main reasons:

First, they can improve system efficiency;

Second, they can reduce system costs.

IPFS achieves both of these.

The IPFS team adopted a highly modular integration approach during development, building the entire project like stacking blocks. The Protocol Labs team was founded in 2015 and spent two years developing three modules: IPLD, LibP2P, and Multiformats, which serve as the foundation for IPFS.

Multiformats is a collection of hash encryption algorithms and self-describing formats (where the value indicates how it was generated). It includes six mainstream encryption methods such as SHA1, SHA256, SHA512, and Blake3B for encrypting and describing node IDs and fingerprint data generation.

LibP2P is the core of IPFS, helping developers quickly establish a usable P2P network layer in the face of various transmission layer protocols and complex network devices, allowing for rapid development at lower costs. This is why IPFS technology is favored by many blockchain projects.

IPLD is actually a conversion middleware that unifies existing heterogeneous data structures into a single format, facilitating data exchange and interoperability between different systems. Currently, IPLD supports data structures such as Bitcoin and Ethereum block data, as well as IPFS and IPLD. This is also one of the reasons why IPFS is popular among blockchain systems; its IPLD middleware can standardize different block structures for transmission, providing developers with a higher probability of success without worrying about performance, stability, and bugs.

IPFS has four advantages:

• A hypermedia distribution protocol that integrates concepts from Kademlia, BitTorrent, and Git.

• A completely decentralized peer-to-peer transmission network that avoids the failure of central nodes, free from censorship and control.

• Entering the future of the internet—new browsers now support the IPFS protocol by default (Brave, Opera), and traditional browsers can access files stored in the IPFS network through public IPFS gateways like https://ipfs.io or by installing the IPFS Companion extension.

• A next-generation content distribution network (CDN)—files can be added locally, allowing global access through cache-friendly content hash addresses and BitTorrent-like network bandwidth distribution.

• Backed by a strong open-source community, providing a developer toolkit for building complete distributed applications and services.

IPFS defines how files are stored, indexed, and transmitted within the system, converting uploaded files into a specialized data format for storage. At the same time, IPFS computes hashes for identical files, determining their unique addresses. Therefore, regardless of the device or location, identical files will point to the same address (unlike URLs, which are native and guaranteed by encryption algorithms, making them unchangeable and unnecessary to change). Then, through a file system, all devices in the network are connected, allowing files stored in the IPFS system to be quickly accessed from anywhere in the world, unaffected by firewalls (no need for network proxies). Fundamentally, IPFS can change the distribution mechanism of web content, achieving decentralization.

How IPFS Works#

IPFS is a peer-to-peer (P2P) storage network. Content can be accessed through nodes located anywhere in the world, which may transmit, store information, or both. IPFS knows how to find the content you request using its content address rather than its location.

Understanding the three basic principles of IPFS:

1. Unique identification through content addressing

2. Content linking through Directed Acyclic Graphs (DAG)

3. Discovering content through Distributed Hash Tables (DHT)

These three principles are interdependent and form the IPFS ecosystem. Let's start with content addressing and the unique identification of content.

IPFS uses content addressing to identify content based on its content rather than its location. Finding items by content is something everyone has always done.

For example, when you look for a book in a library, you often search by title; that is content addressing because you are asking what it is.

If you were to use location addressing to find that book, you would look for it by its location: "I want the book on the second floor, third shelf, fourth layer, counting four books from the left."

If someone moved that book, you would be out of luck!

This problem exists both on the internet and on your computer! Currently, content is located by its position, such as:

• https://en.wikipedia.org/wiki/Aardvark

• /Users/Alice/Documents/term_paper.doc

• C:\Users\Joe\My Documents\project_sprint_presentation.ppt

In contrast, every piece of content using the IPFS protocol has a Content Identifier (CID). The hash is unique to the content it originates from, even if it may appear shorter compared to the original content.

Many distributed systems use hashes for content addressing, not only to identify content but also to link them together—from supporting code commits to running cryptocurrencies on blockchains, everything utilizes this strategy. However, the underlying data structures in these systems may not necessarily be interoperable.

CID (Content Identifiers)

The CID specification originated from IPFS and now exists in multiple formats, supporting a wide range of projects including IPFS, IPLD, libp2p, and Filecoin. Although we will share some IPFS examples throughout this course, this tutorial focuses on the analysis of CID itself, which serves as the core identifier for referencing content in every distributed information system.

A content identifier or CID is a self-describing content-addressing identifier. It does not indicate where the content is stored but forms an address based on the content itself. The number of characters in a CID depends on the encryption hash of the underlying content, not the size of the content itself. Since most content in IPFS uses the sha2-256 hash, most CIDs you encounter will have the same size (256 bits, equivalent to 32 bytes). This makes them easier to manage, especially when dealing with multiple pieces of content.

For example, if we store an image of an aardvark on the IPFS network, its CID would look like this: QmcRD4wkPPi6dig81r5sLj9Zm1gDCL4zgpEj9CfuRrGbzF

https://bafybeiagkgmmhux6fswdoedmwqqsvt5arjivl35wuk25jljb2yqgn7njgu.ipfs.dweb.link/

The first step in creating a CID is to convert the input data, using an encryption algorithm to map any size of input (data or file) to a fixed-size output. This conversion is called a hash digital fingerprint or simply a hash (default using sha2-256).

The encryption algorithm used must generate hashes with the following characteristics:

• Deterministic: The same input should always produce the same hash.

• Irrelevant: A small change in the input data should produce a completely different hash.

• One-way: It is infeasible to reverse-engineer the input data from the hash value.

• Uniqueness: Only one file can produce a specific hash.

Note that if we change a single pixel in the aardvark image, the encryption algorithm will generate a completely different hash for the image.

When we retrieve data using its content address, we can be assured of seeing the expected version of that data. This is completely different from traditional web location addressing, where the content at a given address (URL) may change over time.

Structure of CID

Multiformats is primarily responsible for encryption of identity and self-description of data within the IPFS system.

Multiformats is a collection of protocols for future secure systems, and self-describing formats allow systems to collaborate and upgrade with each other.

The Multiformats protocol includes the following protocols:

multihash - self-describing hash

multiaddr - self-describing network address

multibase - self-describing base encoding

multicodec - self-describing serialization

multistream - self-describing stream network protocol

multigram (WIP) - self-describing packet network protocol

Directed Acyclic Graph#

Merkle DAG inherits the allocability of CID. Using content addressing for DAGs has some interesting implications for their distribution. First, of course, anyone who has a DAG can act as a provider for that DAG. The second is that when we retrieve data encoded as a DAG, such as a file directory, we can leverage this fact to concurrently retrieve all sub-nodes of the nodes, potentially from many different providers! Third, file servers are not limited to centralized data centers, allowing our data to have a broader coverage. Finally, since each node in a DAG has its own CID, the DAG it represents can be shared and retrieved independently of any DAG it is embedded in.

For example, consider the distribution of large data. On the traditional web network:

• The developer sharing the file is responsible for maintaining the server and its associated costs.

• The same server is likely used to respond to requests from around the world.

• Data itself can be archived as a single file and distributed in a monolithic manner.

• It is difficult to find alternative providers for the same data.

• Data may be large chunks that must be downloaded serially from a single provider.

• Others find it difficult to share data.

Merkle DAG helps us alleviate all these issues. By converting data into content-addressed DAGs:

• Anyone who wants to can help send and receive files.

• Nodes from around the world can participate in serving data.

• Each part of the DAG has its own CID and can be distributed independently.

• It is easy to find alternative providers for the same data.

• The nodes that make up the DAG are small and can be downloaded in parallel from many different providers.

All of this contributes to the scalability of important data.

Peer-to-peer (P2P) networks were envisioned as a way to create resilient networks, allowing people to continue communicating even if peer nodes disconnect from the network due to significant natural or man-made disasters.

P2P networks can be used for various use cases, from video calls (like Skype) to file sharing (like IPFS, Gnutella, KaZaA, eMule, and BitTorrent).

Basic Concepts

Peer - A participant in a decentralized network. Peer nodes are participants with equal privileges and capabilities in the application. In IPFS, when you load the IPFS desktop application on your laptop, your device becomes a Peer node in the decentralized IPFS network.

Peer-to-Peer (P2P) - A decentralized network where workloads are shared among peer nodes. Therefore, in IPFS, each Peer node may host all or part of the files to be shared with other peer nodes. When a node requests a file, any node that has those file chunks can participate in sending the requested file. The requesting node can later share data with other nodes.

IPFS seeks inspiration from current and past network applications and research to improve its P2P system. The academic community has produced a wealth of scientific papers offering ideas on how to solve some of these problems. However, while research has yielded preliminary results, it lacks usable and adjustable code implementations.

Existing P2P system code implementations are often difficult to find, and where they do exist, they are typically hard to reuse or repurpose for the following reasons:

• Poor or nonexistent documentation

• Restrictive licenses or inability to find licenses

• Very old code last updated over a decade ago

• No contact points (no maintainers to reach out to)

• Closed-source (private) code

• Deprecated products

• No specifications provided

• No user-friendly APIs exposed

• Implementations tightly coupled with specific use cases

• Inability to use future protocol upgrades

There must be a better way. Seeing that the main issue is interoperability, the IPFS team envisioned a better way to integrate all current solutions and provide a platform that facilitates innovation. A new modular system that allows future solutions to be seamlessly integrated into the network stack.

libp2p is the network stack of IPFS but has been extracted from IPFS to become a first-class independent project and a dependency for IPFS.

In this way, libp2p can further develop without relying on IPFS, gaining its own ecosystem and community. IPFS is just one of many users of libp2p.

This way, each project can focus solely on its goals:

IPFS focuses more on content addressing, i.e., finding, retrieving, and verifying any content on the network.
libp2p focuses more on process addressing, i.e., finding, connecting, and verifying any data transmission processes on the network. So how does libp2p achieve this?

The answer is: modularity.

With multi-language implementations supporting seven development languages, the JavaScript implementation of libp2p also works in browsers and mobile browsers! This is crucial because it allows applications to run libp2p on both desktop and mobile devices.

Applications include file storage, video streaming, encrypted wallets, development tools, and blockchains. Many leading blockchain projects have already adopted the IPFS libp2p module.

• IPLD is a conversion middleware that unifies existing heterogeneous data structures into a single format, facilitating data exchange and interoperability between different systems, using CID as a link.

  First, we define a "data model" that describes the domain and scope of the data. This is important because it forms the foundation of everything we are going to build. (Broadly speaking, we can say that the data model "looks like JSON," resembling maps, strings, lists, etc.) After that, we define "codecs," which describe how to parse it from messages and emit it in the desired message format. IPLD has many codecs. You can choose to use different codecs based on the other applications you want to interact with or simply based on the performance and human readability fit preferred by your application.

IPLD implements the top three layers of protocols: objects, files, naming.

• Object layer - Data in IPFS is organized in a Merkle Directed Acyclic Graph (Merkle DAG) structure, where nodes are called objects and can contain data or links to other objects. Links are encrypted hashes of the target data embedded in the source. These data structures provide many useful properties, such as content addressing, data tampering resistance, and deduplication.

• File layer - To model a Git-like version control system on top of the Merkle DAG, IPFS defines the following objects:

  blob data chunk: A blob is a variable-sized data chunk (without links) representing a data block;

  list: Used to organize blobs or other lists in an ordered manner, typically representing a file;

  tree: Represents a directory and contains blobs, lists, and other trees;

  commit: Similar to a Git commit, representing a snapshot in the version history of the object;

• Naming layer - Since every change to an object alters its hash value, a mapping of hash values is required. IPNS (InterPlanetary Naming System) assigns a mutable namespace to each user and allows objects to be published to paths signed by the user's private key to verify the authenticity of the objects. This is similar to a URL.

Corresponding to the display of IPLD:

IPFS applies the functions of the above modules, integrating them into a containerized application that runs on independent nodes in the form of web services for everyone to use and access. IPFS allows participants in the network to store, request, and transmit verifiable data from each other. However, since IPFS is open-source, it can be downloaded and used for free and has already been adopted by numerous teams.

Using IPFS, various nodes can store data they deem important; but without a simple method and without incentives for others to join the network or store data, the promotion of IPFS is difficult, which led to the birth of Filecoin, the incentive layer for IPFS, providing securitization.

Filecoin adds incentivized storage to IPFS. IPFS users can reliably store their data on Filecoin, opening the door to numerous applications and landing scenarios for the network.

Failure Trap 1: First-Class Ideas, Third-Class Configuration#

When you keenly capture a market gap, clearly design a business model, and secure substantial investment from investors through a mature and clear business plan, everything seems to be going smoothly.

However, entrepreneurs who are brimming with confidence and eager to make a big splash are unaware that the trap is actually ahead.

The once-promising startup Quincy Clothing Company keenly identified a market gap for custom women's professional attire, offering a service to customize women's professional clothing—just provide your body measurements, and you can get the most fitting professional attire.

Their entrepreneurial vision was very precise, but the actual execution faced numerous difficulties. Due to a lack of quality manufacturers, the customized clothing did not achieve the desired fit, leading to a high volume of returns from customers. At the same time, the inventory demand for custom clothing was too high, quickly depleting their funds—when configuration cannot keep up with creativity, the business model can only become a disappointing empty talk.

Professor Eisenmann pointed out three business models that require extremely high resources, which are most likely to fall into the "first-class ideas, third-class configuration" failure trap.

First, the operational process is complex, requiring close collaboration between different professional segments;

Second, there is a need to maintain stock;

Third, there is a huge demand for funds.

Here, "resources" not only refer to funds but also include a series of important resource providers—entrepreneurs, core team members, investors, and partners.

Faced with a resource-constrained dilemma, entrepreneurs must ensure the sustainable operation of the business through "expanding sources" and "controlling expenditures."

1. Expanding sources: Increasing resources

Introducing quality partners is an important way to expand resources. Entrepreneurs must accurately estimate the core technologies, manufacturing capabilities, storage space, customer service, and other resources required for their business model. When unable to independently meet these requirements, they can seek partners to rent such resources.

• Controlling expenditures: Managing scale

If the available resources are insufficient to support a grand vision, narrowing the variety of product lines, outsourcing tricky tasks, and focusing development efforts on a single customer group or geographic area is an effective means to avoid stumbling at the outset.

In the book "The Lean Startup," author Eric Ries redefined the lifecycle of startups: not in terms of how many months a startup can sustain its current "burn rate," but rather how many "pivot" opportunities the company can complete before its cash reserves run out.

Most startup successes are not driven by inspiration but by finding the right direction through repeated trial and error and growing through "learning by doing." Therefore, compared to conducting comprehensive market research, entrepreneurs may prefer to launch new products as quickly as possible.

Especially when the scale of the enterprise continues to expand and the cash consumption rate increases day by day, under the immense pressure of revenue, few entrepreneurs can afford to patiently complete comprehensive market research; they would rather rush to develop and launch products in the shortest time possible.

Professor Eisenmann observed: Most of the time, entrepreneurs do not spend enough time understanding users because they cannot wait.

However, neglecting to thoroughly validate entrepreneurial ideas is dangerous. If the understanding of the market is incorrect, then quickly launching a product means quickly witnessing one's failure.

Entrepreneurs should maintain sufficient patience. Completing the following market research tasks is the only way to avoid falling into failure traps.

1. Customer interviews

First, it is important to recognize that user needs vary widely; do not hastily think about user needs based on personal preferences; the interview subjects should include both end users and decision-makers, ensuring that all individuals involved in the purchasing decision are interviewed.

• Focus groups

Facilitators organize a group discussion with about six strangers with similar backgrounds; ideally, comments from one group member will prompt others to express opinions, recall past experiences, and share their stories. This is something that one-on-one interviews cannot achieve.

• User testing

User feedback on product testing determines the direction of product improvement. To identify unmet user needs, invite them to discuss their experiences using the product, what they like, what they dislike, and what confuses them, among other things.

• Competitive analysis

After understanding user demands, entrepreneurs should transition from the divergent thinking phase to the convergent thinking phase. The goal of this phase is to make decisions and clarify which user needs to address next and which user group to target.

A product that is very popular when it first enters the market may suffer from cold reception after full promotion; this is the trap of misleading positive feedback.

Early users of a new product are often trendsetters who chase novelty, and their needs may differ from those of the broader market. The greater the difference, the higher the likelihood of entrepreneurs misjudging the acceptance of the mainstream market.

In other words, the early signs of success may exceed the actual level.

For startups, misleading positive feedback can tempt them to expand rapidly. However, the faster they blindly expand, the faster they will fall.

A typical case is the high-end pet service company Baroo. When Baroo officially operated in Boston's South End Ink Block, it received unexpectedly high popularity—70% of local pet owners chose Baroo's services.

Such a high customer acquisition rate gave Baroo confidence, and they rapidly expanded into multiple cities, only to quickly encounter a cold response from the market.

The reason for being misled by early positive feedback is that Baroo overlooked a crucial factor: Most homeowners in Ink Block are Hollywood film industry professionals. They have ample financial resources but little time to care for their pets, and Baroo's services precisely met the needs of this minority group.

Coincidentally, the month Baroo opened, an unprecedented snowstorm hit Boston. In such severe weather, no one wanted to go out to walk dogs, which is why Baroo received a large number of orders right from the start.

Market misleading feedback can be fatal, but there is only one way to avoid it: always maintain a clear mind. When early market positive feedback is exhilarating, entrepreneurs should remain calm and recognize that the mainstream market may not produce the same reaction.

Staying calm in the face of victory is not easy; entrepreneurs must constantly remind themselves that early customers are merely unpredictable "black swans." Whenever a startup team is ecstatic about the strong response their product receives, they must stop and ask themselves, "What differences exist between them and the mainstream group?"

Every entrepreneur idolizes top business figures like Steve Jobs and Bill Gates. Having lofty goals is certainly a good thing, but when your business blueprint is overly unrealistic, it can become a dangerous trap.

Grand business designs often either lead the way in technology or attempt to set trends with entirely new business models.

However, entrepreneurs who are too far ahead of their time inevitably face uncertainties regarding themselves and the market. From management, funding, concepts, markets, users, to suppliers, all aspects must meet extremely stringent conditions for a grand vision to be perfectly realized.

Consider that the absence of any one of the following conditions can turn a grand vision into a castle in the air.

1. Efficient development management that allows your product development cycle to keep pace with planning.

2. Selfless investors who provide enough funding to sustain the business until it becomes profitable.

3. Huge user demand that ensures your product achieves great success upon market entry.

4. A broad market space that allows your product to penetrate multiple regions and markets simultaneously.

However, any experienced entrepreneur knows that meeting all these conditions simultaneously is nothing short of a miracle.

Miracles in entrepreneurship are indeed rare; most entrepreneurs who sketch unrealistic blueprints ultimately meet a dismal end, constrained by various factors that "hold each other back."

How can entrepreneurs withdraw from unrealistic business blueprints? The following three points may help you.

1. Assess demand;

Whether your product is genuinely needed by the market is an urgent question to clarify.

To avoid the subjectivity of verbal descriptions, entrepreneurs might consider conducting smoke tests, which test users' willingness to pay deposits for products that do not yet exist. Only users who are genuinely willing to pay are considered real users. Tesla once required customers to pay a $1,000 deposit for the Model 3 to gauge market demand for the vehicle.

2. Prepare for delays;

Once your product development is delayed, it becomes challenging to ensure that your product is a market leader or unique. New technologies may emerge at any time, and competitors will quickly notice this field, so entrepreneurs need to be prepared for this. Whether to keep up with market changes or stick to their unique features is a crucial balance entrepreneurs must weigh.

3. Restrain the paranoid founder

Founders who easily fall into this failure trap often possess narcissistic personalities and paranoid tendencies. They are firmly convinced of their ideas and abilities, often refusing to admit mistakes and doubling down on the wrong path. Only by introducing a board of directors for checks and balances or seeking help from professional trainers can founders be restrained to prevent the company from falling into a tipping point.