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Establishing a Web3 company can take the following steps:

1. First, 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 responsibilities.

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 the above steps, a Web3 company can be established.

To promote Web3 projects, I have the following suggestions:

• Emphasize content marketing: Attract the attention of target customers by creating high-quality articles, videos, images, and other content, 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 aesthetically pleasing brand logos, websites, and promotional materials.

  Cold Start: An Inescapable Entrepreneurial Dilemma

  The difficulty of a cold start lies in the numerous constraints and challenges that innovative entrepreneurs inevitably face.

  1. Resource limitations.

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

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

  • Lack of a foundation to persuade participants in the business model.

  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. Therefore, it is difficult to attract potential consumers, users, suppliers, or investors.

  Thus, during the cold start phase, business model innovators need to 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 surely inspire you.

  Strategy 1: Lean validation of business logic feasibility

  On the surface, the first problem entrepreneurs need to solve is to quickly obtain more revenue. However, if we liken the revenue of a business 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 constantly being consumed);

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

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

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

  Through lean validation, the acceptance of the target market and the integrity of the business model can be confirmed 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 fastest speed and the highest cost. A representative company is Webvan—a fresh produce company founded in 1996. Its pioneering "online ordering, offline delivery" business model revolutionized consumer shopping habits at the time. It attracted the attention of many renowned venture capital firms, including 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 a rocket launch 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 result: 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 characterized by 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 maximally preserves the company's options. Amazon founder Jeff Bezos holds the book "The Black Swan" in high regard, and the idea of options is one of the important underlying logics for Bezos's operation of Amazon. According to "The Black Swan," events that have a significant impact on the future are often unpredictable. The idea of options is based on this, suggesting that we need to create "options" at controllable risks and costs, and then quietly wait for clearer decision-making information or signals to appear. Amazon's strategy constantly practices the idea of "options." 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 the more "real" value.

  Establishing a new customer value perception allows new business models to stand out among many mature products, gain more attention, and also provide unique value perceptions for potential customers. Therefore, it has become 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 a demand for fresh produce will naturally become their target customers; they position their target customers as "communities with high density and high income characteristics in large cities that can accept new things." This is because the value of Amazon Fresh delivery does not solely lie in the products themselves but depends on the extent to which 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 appearing as an intuitive response. For example, people always associate roses with love, and even though a carnation looks similar to a rose, it will not be the first choice on 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 "health" and "trendiness," showcasing 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 label or new category image, then even selling the same product 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, environmental protection, and sustainability, influencing public perception through celebrities and IT elites. This illustrates that as long as a business model can successfully occupy the market's mental model, its probability of success will greatly increase.

  Strategy 3: Make full use of complementary assets

  Entrepreneurs in the cold start phase often find it difficult to invest sufficient funds and manpower in every aspect of transactions. Therefore, complementary assets hold significant value throughout the entire transaction process for entrepreneurs. 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 cover all aspects of the 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 with higher efficiency.

  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 the power of 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 a business model. The market finds it difficult to have confidence in a new and unfamiliar entity, and not every audience is willing 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 Apple phones must be quite good, even if they know nothing about the company itself.

  A Chinese startup called "Yunce" opened up the market through this method. Yunce's core capability lies in providing solutions for mobile application developers. In the early stages of difficulty in market penetration, 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 company valuation is nearly $500 million.

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

  Not only does Professor Guo Bin provide solutions for how to cold start a business model, but in the book "Business Model Innovation," he also delves into the essence of business models, dismantling the underlying logic and strategic top-level thinking of the business world, 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 the ceiling, I believe you can continuously create new possibilities and greater patterns in the world of business.

  Write an ERC 721 smart contract using Solidity, which needs to have a whitelist function.

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 in 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, capable of handling 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 different types of application needs, expanding 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.

In addition, 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 created.

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 demand, creating valuable and attractive content can attract more readers.

2. Establish social media channels: Create personal blogs, social media accounts, and other channels, 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 allow more people to 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 the 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 (the former is the focus of this article and 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 globe 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, providing a faster and more reliable experience.

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, which is 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, and there have even been many Chinese character domains. We have noticed that on the NFT trading platform OpenSea, there are several well-known high-priced domains, such as the domain 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 has even been quoted at 1 million USDC, approximately 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 liken ENS to a decentralized phone book, except that the phone is connected to a cryptocurrency wallet, which can be used for cryptocurrency payments.

ENS was initiated on May 4, 2017, by Alex Van de Sande and Nick Johnson from 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 Ethereum addresses that we often see starting with Ox, which can be up to 42 characters, to custom short addresses, such as vitalik.eth, mirian.eth, 9141.eth, and so on.

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

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 address of Ethereum, and in recent years, incidents of users losing assets due to address errors have occurred frequently. ENS has effectively solved this problem, 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 establish sessions by exchanging HTTP. HTTP defines the structure of this data and how clients and servers interact.

Web pages are composed of objects, and an object is simply a file, such as an HTML file, a JPEG graphic, or a small video file, which can be addressed via a 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 send 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 C/S architecture for internet communication, operating on a centralized backbone network, which also has many drawbacks.

1. Data on the internet is often permanently erased due to files being deleted or servers shutting down. Some statistics indicate that the average lifespan of web pages on the internet is only about 100 days, and we often see websites displaying "404 errors."

2. The efficiency of the backbone network is low, and the cost of use is high. Using the HTTP protocol requires downloading the entire file from a centralized server each time, which is slow and inefficient.

3. The concurrency mechanism of the backbone network restricts 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 also greatly limit 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 subject to interruptions due to war, natural disasters, and central server outages, which can disrupt the entire internet service.

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 releasing storage space, thereby reducing data storage costs. If a P2P method is used for downloading, bandwidth usage costs can be reduced by nearly 60%.

3. IPFS is based on a P2P network, allowing multiple sources to store data, 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 reliance 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 offering large storage capacity, fast download speeds, and the ability to check historical versions of files, 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 the IPFS foundation.

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

LibP2P is the core of IPFS. Facing various transport layer protocols and complex network devices, it helps developers quickly establish a usable P2P network layer, efficiently and cost-effectively. 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 high probability of success without worrying about performance, stability, or 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 central node failures, with no censorship or control.

• Entering the future of the internet—new browsers now natively support the IPFS protocol (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.

• Next-generation content distribution network (CDN)—files can be added to local nodes, 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 in the system, converting uploaded files into a specialized data format for storage. At the same time, IPFS calculates the hash of identical files to determine their unique address. Therefore, regardless of the device or location, identical files will point to the same address (unlike URLs, this address is native and guaranteed by encryption algorithms; you cannot change it, nor do you need to). 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 a network proxy). 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 information, 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 the book's 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 "I want the book on the second floor, the third shelf, the fourth book 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 comes from, even if it may look short compared to the original content.

Many distributed systems use hashes for content addressing, not only to identify content but also to link it together—from supporting code commits to running cryptocurrency 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 the course, this tutorial focuses on the analysis of CID itself, which every distributed information system uses as the core identifier for referencing content.

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 hash values with the following characteristics:

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

• Non-correlated: 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 a content address, we can be assured of seeing the expected version of that data. This is entirely different from location addressing on the traditional web, 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 cooperate 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 (DAG)#

Merkle DAG inherits the assignability 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 retrieve all sub-nodes of the node in parallel, potentially from many different providers! Third, file servers are not limited to centralized data centers, allowing our data to have a broader coverage. Finally, because each node in a DAG has its own CID, the DAG it represents can be shared and retrieved independently of any other 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 all over the world.

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

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

• Data may be large and 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 conceived as a way to create resilient networks, allowing communication to continue even if peer nodes disconnect from the network due to significant natural or human-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 in the application with equal privileges and capabilities. 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 looks for inspiration from current and past network applications and research, attempting to improve its P2P system. There is a wealth of scientific papers in academia providing ideas on how to solve some of these problems, but while research has produced 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 usually 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 are too tightly coupled with specific use cases

• Inability to use future protocol upgrades

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

libp2p is the network stack of IPFS, but it 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 the many users of libp2p.

This way, each project can focus solely on its own 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 process 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 top blockchain projects have adopted the libp2p module from IPFS.

• 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 serves as the foundation for everything we will 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 form we want. 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 preferences of your own 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 order, typically representing a file;

  tree: represents directories and contains blobs, lists, and other trees;

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

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

Corresponding to IPLD's display:

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

Using IPFS, various nodes can store the data they deem important; but without a simple method or 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 incentive-based storage to IPFS. IPFS users can reliably store their data on Filecoin, opening the door to numerous applications and real-world scenarios for the network.

Trap of Failure 1: Top-notch Ideas, Mediocre 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, the entrepreneur, brimming with confidence and eager to make a grand display, is unaware that the trap is just ahead.

The once-promising startup Quincy Clothing Company astutely identified the market gap for women's professional attire customization, offering a service where you could get a tailored professional outfit just by providing your body measurements.

Their entrepreneurial vision was precise, but execution proved to be fraught with difficulties. Due to a lack of quality manufacturers, the customized clothes did not fit as expected, leading to a high volume of returns. 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 devolve into disappointing talk.

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

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

Second, it requires stock reserves;

Third, it demands significant funding.

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

Faced with resource constraints, entrepreneurs must ensure the sustainable operation of the enterprise through "increasing revenue" and "cutting costs."

1. Increasing revenue: Expanding 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 necessary for their business model. When unable to independently meet these requirements, they can seek partners to rent such resources.

• Cutting costs: Controlling scale

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

In the book "The Lean Startup," author Eric Ries redefines the lifecycle of a startup: it is not about how many months a startup can sustain its current "burn rate," but rather how many "pivots" the company can make before its cash reserves run out.

Most entrepreneurial success does not come from inspiration but from repeatedly finding the right direction through trial and error, 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 immense revenue pressure, few entrepreneurs can afford the patience to complete thorough market research; they would rather rush to develop and launch products in the shortest time possible.

Professor Eisenmann observed that 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 must maintain sufficient patience. Completing the following market research tasks is the only way to avoid falling into the trap of failure.

1. Customer interviews

First, it is essential to recognize that user needs vary widely; do not rashly think about user needs based on personal preferences. Entrepreneurs should interview not only end users but also decision-makers, ensuring that all participants in the purchasing decision are interviewed.

• Focus groups

Facilitators organize a group discussion with about six strangers who share similar backgrounds. Ideally, comments from one group member will prompt others to express opinions, recall past experiences, and share their own stories. This is something 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 shift from divergent thinking to convergent thinking. 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 entering the market may face indifference 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 mass market. The greater this difference, the higher the likelihood that entrepreneurs will misjudge the acceptance of the mass market.

In other words, the early signs of success they observe may exceed actual levels.

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 lukewarm market response.

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

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

The misleading feedback from the market can be fatal; however, there is only one way to avoid misleading feedback: 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 unpredictable "black swans." Whenever a startup team is ecstatic about the strong reactions 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 ahead of their time must face uncertainties both within themselves and in 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 the plan.

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 vast 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 face dismal outcomes constrained by various factors "holding each other back."

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

1. Assess demand;

Whether your product is genuinely needed by the market is a question that needs clarification.

To avoid the subjectivity of verbal descriptions, entrepreneurs can consider conducting smoke tests, which test users' willingness to pay a deposit for a product that has not yet been completed. Only users who are genuinely willing to pay are the true 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 the market leader or unique. New technologies may emerge at any time, and competitors will quickly notice this field, so entrepreneurs need to be prepared. Whether to keep pace with market changes or stick to their unique features is a dilemma entrepreneurs must weigh.

3. Restrain the paranoid founder

Founders who easily fall into this failure trap often exhibit 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.