[json] REST API - file (ie images) processing - best practices

Your second solution is probably the most correct. You should use the HTTP spec and mimetypes the way they were intended and upload the file via multipart/form-data. As far as handling the relationships, I'd use this process (keeping in mind I know zero about your assumptions or system design):

  1. POST to /users to create the user entity.
  2. POST the image to /images, making sure to return a Location header to where the image can be retrieved per the HTTP spec.
  3. PATCH to /users/carPhoto and assign it the ID of the photo given in the Location header of step 2.

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