Originally Posted by: Abstract Developer Jarrod Watts

Compiled by Odaily Planet Daily ( @OdailyChina ); Translated by Azuma ( @azuma_eth )

Editor's Note: The x402 protocol has become the latest market hotspot. As the concept's popularity grows, several x402-related tokens, represented by PING, have seen significant price increases. What exactly is x402? What are its applications? What are its development prospects? Are these so-called x402-related tokens simply hype or do they hold real value? Abstract developer Jarrod Watts offers his insights into these questions in his latest article.

The following is the original content of Jarrod Watts, translated by Odaily Planet Daily.

In the past two days, the total market value of the so-called x402 concept currency has exceeded 100 million US dollars, and it became popular almost overnight - although the protocol was actually released several months ago.

I spent a whole day setting up my own x402 server just to figure out whether this was just another "quick buck" narrative in the AI bubble or a technology that could truly change the way AI agents interact with the internet.

Here are the conclusions I came to.

Basic concepts: API and status codes

Before we get started, I need to briefly introduce some basic concepts (especially for those who have no development experience), mainly API and status codes.

If you're starting to get bored, don't give up yet, it's actually very simple.

All you need to know is that the client (such as an application or AI Agent) requests information from the server (backend) through the API, and the server returns a status code and some data.

• Key Point 1: Client requests data ➡️ API returns status code and data;

Each status code has a different meaning, and 402 is one of them. Here are a few examples:

1. Status code 200 = OK (request successful);
2. Status code 404 = Not Found (resource not found);
3. Status code 402 = Payment Required (payment required);

The problem is that the 402 "Payment Required" status code is almost never actually used — as a developer, I had never even heard of it before.

Another point is that currently when using most APIs, developers must first register on the API's developer platform, bind their credit card information, and pay based on usage (bound to a unique API key).

With this in mind, we can now ask the following questions: What is x402? Why does it appear? How does it work?

x402: What is it? Why does it appear? How does it work?

The emergence of x402 stems from the vision of a group of tech geeks at Coinbase: "Now that we have AI agents and cryptocurrencies, why not make the 402 status code truly useful?"

Therefore, x402 extends the original 402 status code. Instead of just returning a useless prompt, it directly enables payment functions in API requests (usually using stablecoins).

This allows APIs to require clients to pay when accessing the interface, and clients can complete the payment using cryptocurrency in the same HTTP request.

• Key Point 2: Clients can now pay API fees directly with stablecoins;

You might ask, how exactly is cryptocurrency transferred in HTTP requests? Does every API now have to write code to handle on-chain transactions?

Actually, both are possible. The API can handle the payment itself, or it can hand over the on-chain payment to a so-called “Facilitator” (payment intermediary).

A facilitator is a service provider that verifies the legitimacy of the client’s payment authorization and then helps complete the payment on the chain.

They exist to make it easier for API developers to integrate x402 payments.

• Key Point 3: Facilitator can handle on-chain payments for API developers;

How x402 empowers AI Agent

Traditional payment methods are not AI-friendly. The existing payment system requires extensive manual setup and maintenance, making it impossible for AI to operate independently.

Currently, in order for AI Agents to access paid APIs, they must manually register on various platforms, bind credit cards, and maintain API keys - the entire process relies entirely on human intervention.

x402 “kills the API key” and allows payments to be completed directly through HTTP requests, allowing AI agents to access paid APIs without human intervention.

• Key Point 4: x402 eliminates reliance on manual labor and third-party payment platforms;

In the process, it also cuts out the hefty commissions of credit card and third-party payment middlemen.

What about x402 tokens?

In my opinion, the new x402 token may fit into this new narrative in the following ways.

• The API requires clients to pay with a proprietary token (not a stablecoin) — which is interesting.
• Facilitators require APIs to pay for their services in their own tokens — this model already exists but has limited appeal;
• Purely speculative tokens — like those from the last AI craze.

During the last wave of hype surrounding AI, we saw many AI tokens soar to billions of dollars in market capitalization, but these tokens had almost no meaning other than being vaguely associated with some chattering robot X.

The x402 concept coin feels similar to this.

But the key question is not "why does this token need to exist", but to admit that most people in the cryptocurrency industry are here to make money, and the so-called x402 token just creates a perfect speculative market.

I suspect we'll see a new wave of AI tokens emerge and capitalize on the hype in the coming weeks. They may still be meaningless, but the most important question to ask is: "Are you here to be smart? Or are you here to make money?"

Conclusion

x402 is a truly innovative technology related to cryptocurrency that provides a very powerful use case for stablecoins and enables AI agents to interact natively with the internet.

I think we will soon see the intersection of x402 payments, ERC-8004 trustless agents, and verifiable AI, leveraging the open nature of blockchain to establish a reputation and trust system for AI - this is another topic worth exploring in depth.

Today, the crypto industry is finally seeing more practical consumer applications, mainstream adoption of stablecoins, and institutional adoption. The x402 is undoubtedly another step in the right direction.