Crypto

X402: The Key to Internet Money, Micropayments & The AI Agent Economy

David Hoffman
David Hoffman•Nov 5, 2025

Summary

X402 is a revived HTTP 402 status code that enables on‑chain micropayments for API access, allowing clients to attach a signed stable‑coin transfer (typically USDC on Base or Solana) to a request and receive resources once the transaction settles. The protocol fills a decades‑old gap in the web stack, where early designers anticipated payment‑required responses but lacked the technology for tiny, automated transactions. Recent blockchain advances—low‑cost gas on L2s and cheap stable‑coin transfers—make one‑cent payments feasible, prompting adoption by services like Cloudflare’s pay‑per‑crawl and emerging AI‑agent ecosystems. As a de‑facto standard, X402 could create a network effect, unifying disparate pay‑per‑use services under a common, charge‑back‑free crypto payment model.

Original Description

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Micropayments were always meant to be part of the internet, but the technology never existed to make them work.
Until now. David sits down with Sam Ragsdale, CEO of Merit Systems, to unpack x402, a new protocol reviving the long-dormant “Payment Required” status code to enable crypto-powered microtransactions across the web.
They explore how x402 could transform how machines, AI agents, and humans pay for internet resources, reshape online business models beyond ads, and unlock a new economy of autonomous agents and programmable commerce.
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We’re being compensated by Bit Digital (NASDAQ BTBT) for this segment promoting their company and BTBT. The compensation is paid in cash as a one time payment. You can find additional information about Bit Digital and BTBT on their Investor page at https://bit-digital.com/investors
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TIMESTAMPS
0:00 Intro
0:10 What is x402?
6:19 Internet Micropayments
9:45 x402 Encryption
12:10 x402 Inception
15:20 How x402 Transactions Work
27:02 x402 Experiments
39:46 Paywalls
43:53 A New Internet?
47:12 Call to Builders
49:21 Merit Systems
53:56 Resources
55:36 Closing & Disclaimers
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RESOURCES
Sam Ragsdale
Merit Systems
x402scan
Coinbase x402
Stratechery - The Agentic Web and Original Sin
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Not financial or tax advice. See our investment disclosures here:

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