Coinbase Breathes New Life Into Long-Forgotten Web Payment Code

Since the early days of the internet, HTTP 402, a payment status code that showed “Payment Required,” has existed as a placeholder in web protocols. It was a digital relic that once promised an internet with built-in payment capabilities but was never fully realized.

Three decades later, crypto exchange Coinbase, through its Developer Platform, has brought it back to life with x402, a new, open-source protocol that creates a native payment layer for the web.

“Imagine a future where crypto is the default to pay for anything,” Nemil Dalal, lead developer at Coinbase’s Developer Platform, said on X.

Launched on Tuesday, the new protocol enables users to make payments without registration, emails, or complex signatures.

“We’ve architected it in a way where it works for any blockchain,” Dalal claimed.

How it works

x402 uses the older HTTP 402 payment status code to let clients, whether human users or AI agents, know that they need to pay up. They could then authorize a stablecoin payment request.

Once the server verifies the signature, it broadcasts the transaction to a blockchain and provides access to the content or API, based on a request.

Asked about possible security loopholes, Erik Reppel, head of engineering at Coinbase Developer Platform, told Decrypt that a “built-in verification step” was included to protect “against replay attacks and ensure each request is securely paid for.”

On its whitepaper, Coinbase developers claim x402 would remove “account and billing friction from payments” and enable “true pay-per-use access without subscriptions, prepaid credits, or manual invoicing.”

But while x402 opens prospects, the tech behind it could face bottlenecks once adopted for a wider audience.

Those interested in adopting x402 would need to iron out implementation, Nader Dabit, director of developer relations at EigenLayer, explained to Decrypt.

Given a scenario where a user encounters an x402 payment request without a compatible crypto wallet or stablecoin balance, Dabit noted potential issues.

“This would just error out and the developer would have to take it into account in their application flow,” Dabit explained.

In response to questions on usability, Coinbase’s Reppel claims things have improved. 

“We believe crypto finally delivers a user experience that rivals, and even surpasses, traditional options,” he said.

Open standard for agentic finance

Despite the possible challenges to security and user experience, the new protocol addresses a bottleneck in AI-driven finance and commerce.

“Giving agents access to external context and APIs is a high-friction process, with lots of manual configuration that prevents agents from autonomously accessing external services,” Coinbase Developer Platform said in a tweet.

With a single line of code, x402 could transform how AI agents operate on-chain and eliminate outdated payment models.

Coinbase Developer Platform also said it plans to further decentralize x402’s roadmap, inviting community contributions to “create an open standard to drive forward agentic finance.”

Edited by Sebastian Sinclair