Everything You Need to Know about x402: The 30-Year-Old HTTP Code Built for the AI Economy

**Erik Reppel** (0:05)
I'm super excited to be here, my name is Erik. I'm the head of engineering at Coinbase Developer Platform, and the co-founder, creator, I wrote X402.
So I'm here to talk to you all about an open standard for internet native payments. And this is kind of the, this is the byline of X402. It's, and we'll get into each one of those bits, open standard internet native and payments.
And so, roughly today I've got, we're going to talk about how the internet was designed for humans, and we're now entering an age of AI. We're going to talk about agenda commerce. We're going to talk about open protocols. We'll talk about X402, of course, and we'll close it out. So, a thing we don't realize is the internet was designed for humans to use. Computers are kind of the backbone of the internet, but really the user has been a human for all of the history of the internet. And so, what actually was shipped? Like, what is the internet is a thing people don't think about very much. But the internet, as we think about it, the consumer web is really HTML, HTTP, and the browser. And that's what was shipped by CERN way back in the day, and that's what enabled kind of the internet revolution, is those three pieces of technology. And what you notice is each one of those is a standard. HTML is a standard way of declaring how to display information. HTTP is a standard way for communicating information. The browser is an interface that takes all those standards and kind of glues them together so that it knows how to speak those different protocols. And these sets of standards are for computers to communicate to other computers and show information to humans. And we kind of got, people think about this as web 1.0. This is kind of the read air of the Internet. It wouldn't be a crypto conference without a web 3 reference, but I'm not making it, I promise. Web 2.0, which kind of unlocked the real consumer adoption and kind of brought us to the lives that we all have where we do e-commerce and take Uber rides and go book Airbnb's really came when we got the right layer of the Internet. These two are just standards, JavaScript, Ajax and JSON are just standards for writing back to the servers that sent you information.
So really, it's been true for almost 50 years now, the web evolves through standards.
So we're now in the age of agents, we're now in the age of agent and commerce. Current web standards were designed for humans to operate computers, and we now live in a world where both humans and computers operate, and computers operate computers. And this is new, this is a new phenomenon, where your user isn't just some human looking at a screen, but is an agent, and that agent wants to pay you, they want to receive your content, they want to participate in this economy, they want to participate on the Internet. And what you'll notice with all those standards I discussed is, you've done a really good job of answering the question of how do I give you information, and what should that information look like, but we actually have not to this point solved the question of how do I give you value on the Internet. And it's a subtle point because we have crypto, we have credit cards, all of these kind of like sit a layer above the protocols of the Internet. There's nothing native to the Internet that's existed thus far. And that's what XOR 2 really tries to do, is be native to the Internet itself, rather than kind of sitting off in the corner doing a kind of being a weird lump on top.
And so a thing I think many people are not aware of is that AI is about to break the Internet's economic model. And so the Internet largely is an ads-based economy. You go to a website, that website shows you content, they include an ad somewhere on the page. At some rate, you click that ad, and that website gets some money from an advertiser, a publisher who wants you to see that ad. And maybe it will be to go book a vacation, maybe it's brand awareness, maybe it's go buy something with e-commerce. But agents don't see those ads. They just ignore those ads completely. And so what is going to be the economic model for the Internet as a whole in an age of AI?
And so, one, personally, I think microtransactions have a large role to play. But broadly, the agentic economy is estimated to be $3 to $5 trillion in four years. As cited by A16Z in their annual report. And some people project that agents could account for 25% of e-commerce in the US, which is also a massive, massive number.