Author:Token Dispatch, Nishil
Foreword
Last week, my social media was flooded with Monad boxes. Anyone else like me, unable to resist logging in every day to open one? It felt like going back to childhood, opening blind boxes, cricket cards, Pokémon card packs—all that excitement condensed into a few clicks of the mouse. We've grown up, but some habits never disappear.
Speaking of old things, I often think that if people from the 2000s tried using payment apps and banking services now, they would hardly feel any difference. Why is it that instant messaging has evolved to the point where anyone can send a message to anyone in the world with a simple click, but when I try to send money, the internet suddenly seems outdated?
... This is because the internet was originally designed for information sharing, and money has always been secondary. We've filled the funding gap through advertising, subscriptions, and payment gateways. These methods are clever, but not a truly fundamental solution. I've always found it strange that the internet has freed communication from geographical limitations, yet the flow of funds still relies on outdated banking systems. We've developed AI agents smart enough to find the best flights in seconds, but they still need to wait for slow-moving humans to enter credit card numbers to complete a purchase. Today, AI agents are taking on the tasks we once did, and expecting them to use outdated financial systems would severely hinder the development of AI. Agents need a way to transfer funds across the network as easily as transferring data, and we need to build such a system for them. This is the gap that Coinbase is trying to fill with the x402. Now let's get down to business. The Forgotten Status Codes x402 is based on a long-forgotten part of the HTTP protocol—its original purpose was to make payments as easy and convenient as loading images or videos. But to understand what x402 is, we first need to understand how HTTP itself works and the purpose of the 402 status code. HTTP is the foundation of the modern web, defining the rules for data transmission between clients (such as your browser) and servers. To manage this communication, HTTP uses status codes, short signals that tell the browser what happened when it tried to access a page. You may have seen some of these status codes: HTTP 200 – OK: Page loaded successfully. HTTP 404 – Not Found: The resource does not exist. HTTP 500 – Internal Server Error: A server-side failure has occurred. These codes help the browser understand the interaction process and clearly communicate it to the user.

Besides the commonly used and well-known codes, the HTTP standard also includes some other defined but rarely used codes, one of which is HTTP 402: Payment Required.
The 402 standard itself is very simple and straightforward. It opens up space for web pages to convey payment-related information via the HTTP standard, much like the
tag tells the browser where to find the image.
Incredibly, this idea has been dormant for decades. I believe it simply needs the right financial tool to scale with the internet, namely blockchain.

But the real question is: what actually happens after you click to pay?
According to the standard, the server will return "HTTP 402: Payment Required". This seems insignificant on its own, but when combined with infrastructure that allows funds to be transferred as quickly and easily as internet data transfer, it could be revolutionary.
Wait, isn't that what Stripe and PayPal are doing? Making online payments possible?
Wait, isn't that what Stripe and PayPal are doing? Making online payments possible?
... No, Stripe operates very differently from x402's proposal. While internet payment solutions like Stripe and PayPal enable one-click payments on web pages, many obstacles remain in the process. These solutions bypass the HTTP servers users are interacting with, redirecting users to their own APIs and interfaces. This confines both merchants and users to a closed ecosystem, requiring KYC verification, credit cards for payments, and various fees, making small payments difficult. If I have to withdraw cash from a specific ATM every time I shop in a store, I might as well not buy anything. This experience is similar to PayPal now, only online. The core issue isn't PayPal's design, but rather the inherent scalability of traditional banking to support the liquidity of online commerce. I can send an emoji to anyone, anywhere in the world, and in terms of cost and time, it's the same as sending an article. But online payments are a different story. Most bank cards and services like PayPal charge around 3% in fees on top of a fixed fee. This fee makes small online transactions nearly impossible. Sending $0.01 can cost over $0.30, which is absurd. Blockchain doesn't have these limitations. What excites me most is that with stablecoins and high-throughput networks capable of processing thousands of transactions per second, everything is finally ready. We now have the infrastructure to make transferring money over the internet as easy as sending a text message. HTTP Meets Blockchain - x402 Ultimately, x402 is simply a modern upgrade to the long-forgotten 1990s status codes. It supports native HTTP-based payments, powered by a blockchain track. Let me explain how it works: Request: When a client (whether human or AI) requests something without a valid payment, the server replies with an HTTP 402 Request Payment message along with a JSON payload explaining what needs to be paid, how, and to whom. Payment: The client then makes the payment (usually using USDC on a supported network) and resends a request with a confirmation payment authorization header. Verification: The payment service provider checks the on-chain payment. If valid, the server releases the requested data. Importantly, x402 itself does not handle funds; it only defines the handshake protocol. Settlement is handled by the payment "service provider" (payment processor or on-chain contract) configured by the client. The power of x402 lies in its ability to allow my Web 2.0 developer friends to add stablecoin payments to their existing websites without any new integrations or complex setup. It's actually simpler than setting up Stripe or PayPal, making it much easier for me to pitch Web 3 technologies to them. Meanwhile, the AI system I'm using finally allows me to browse and pay with a single click, making online shopping as easy and convenient as sending and receiving emails. It's effortless for both me and my AI assistant. What excites me most about this shift in online payments is that I finally have control over how my funds flow online. I can develop clear strategies and explicitly define how my funds are used. I only want to pay for the Wall Street Journal article I read, instead of having a monthly subscription that accumulates into spam. I want my streaming apps to charge only for the actual seconds watched, no longer bound by annual contracts. I want my AI agent to be able to access research materials and APIs from paid resources on an on-demand basis. This level of control is liberating. While allowing businesses to accept small payments may not be cost-effective from a unit economic perspective, the potential for small payments to help businesses scale and eventually surpass their current revenue levels is noteworthy. This advantage becomes even more apparent when considering how tiered transactions can transform passive internet users into active economic participants, potentially multiplying online GDP in the process. Coinbase launched the x402 standard in May of this year. Since then, several projects have begun developing based on this standard. Some interesting use cases include: Questflow: A multi-agent orchestration tool that uses the x402 protocol to allow agents to autonomously pay for APIs within complex workflows. Anchor Browser: Allows in-browser agents to pay for paywall content or launch new browsing sessions. Pinata: Upload and retrieve to IPFS without an account using x402. Pay for private or public IPFS storage and retrieval without an account or API key. In my opinion, what we're seeing now is just the tip of the iceberg. Once money flows like data, we'll see funds become freely combinable on the network. Search, discovery, and payments will increasingly shift to agents. This isn't surprising, but currently most of x402's use cases revolve around crypto applications. To attract external demand, we need the right network effects. Just as eBay was a springboard for the early adoption of PayPal, x402 now needs its own "eBay moment," a flagship platform that can drive mainstream adoption. Fortunately, Coinbase has played a leading role in the x402 space, which is conducive to building important Web 2.0 partnerships and brings us closer to finding a flagship platform that can spark widespread adoption. Some of these partnerships are significant: Cloudflare: Recently partnered with Coinbase to establish an independent x402 Foundation. Google: Integrating x402 into its new Proxy Payment Protocol 2 (AP2) standard, and Visa: Visa added support for x402 to its Trusted Proxy Protocol (TAP). What's my take? A few years from now, I'll have my AI assistant generate a market report. It will silently access various data sources, news reports, Reddit posts, buy articles for a few cents and bypass paywalls, while also passing my pre-set policy checks. No checkout windows, no payment forms, and no lurking tracking cookies in the background to generate ad revenue. Everything will happen autonomously, according to my will. This is the future I envision x402 will enable—a world where payments are a native part of the internet. Once x402 scales, we will see entirely new applications emerge that are impossible in today's financial system. Users will deposit funds into the platform's user interface and use the account anywhere on the web. Imagine social media likes serving as a source of income for creators; fitness agents tracking your workout gear usage and purchasing healthy food for you; wearable devices listening to your daily conversations and recommending potential Polymarket deals; or your personal agent communicating with other agents, negotiating and paying for flights, booking rooms, and more. This is just the tip of the iceberg. With x402, I can see a network where money can be transferred as easily as information, whether in cents or dollars, by agents or humans. The agents in my browser are excited about this, and so am I.