Is x402 Overhyped?

If you gave machines the ability to exchange money easily, what would that unlock? Personal shoppers, AI accountants, fully automated companies an automated economy.

Well that’s basically what you’ve probably heard about x402 lately, the new “payment layer for agents” that’s supposedly going to revolutionise how payments works.

But be careful. A lot of these people have a vested interest in selling you a dream. In my opinion, 80% of the rhetoric is noise. There are some glaring problems with how people are suggesting the tech should actually be used.

But honestly, if adopted widely, it actually could be pretty massive. So in this post, I’m going to break down clearly and in-depth on

• What x402 actually is

• How it works (and some real examples)

• What’s real about it (use cases that are practical given the current adoption of the protocol)

What is x402?

TL;DR

When HTTP was first created, there was supposed to be a 402 status code “Payment Required.”

Like how you see a 404 for “Page Not Found,” 402 was meant to say, “You need to pay to access this resource.”

That never got built… until now.

Fast forward to today when Coinbase’s Erik Reppel decided to bring that idea back to life with x402, a standard for sending value between computers.

Traditional systems like Stripe or PayPal weren’t designed for this. They need accounts, API keys, human checks, and KYC processes and none of which work for autonomous agents.

As Reppel put it:

Now with stablecoins like USDC, fast and programmable money finally exists. And with the rise of agents… this question becomes much, much bigger.

Agents aren’t just chatbots anymore. They browse, summarize, build, analyze, and automate tasks like specialized workers in a digital economy.

We may very soon see:

• An AI researcher agent paying for new datasets automatically.

• A social media agent tipping creators when it uses their content.

• A customer service agent refunding customers on its own.

Why Not Just Use Stripe?

Good question. You might think: why can’t agents just use a Stripe account?

Here’s why:

• APIs can be human-gated. They require account creation, API keys, manual onboarding, and centralized control.

• Fiat money brings friction. Less programmable, more Fees, delays, and cross-border restrictions make it hard for agents to transact globally.

So x402 is basically a bridge between APIs and crypto payments, built for automation.

As @deelabsxyz brilliantly unpacks in this thread, x402 flips payments from Stripe's costly fiat drag into crypto's yield-bearing superhighway.

How It Works (Simply)

Let’s break down how it works in very simplified form. I will go over some use cases we are looking at in Coral.

1. Adding a paywall to existing service

Let’s say, I have an API that allows people to scrap data that i provide around AI news and I want to join the x402 ecosystem so agents can use my service easily and let people pay for your service you just need to support it by setting it up.

There will be a process where you need to add wallet to it so it can accept crypto payments and a few other small things but the imporant part is now you support x402. Well any time an agent calls my API now with x402, instead of returning data, it might now say “This request costs $0.02. Please pay here.”

2. The requester sends the payment.

It uses its crypto wallet to send the required amount (usually in USDC) to the provided wallet address and registers the transaction on blockchain.

3. The transaction is verified

Once payment is confirmed, it releases the data or executes the service.

In a larger system you might see something like this, where the x402 agent that can transaction is working with agents part of a larger system.

What to Ignore (The Hype Layer)

Here are some claims you’ll see that are over-stated or currently unrealistic:

• “x402 replaces banks.” - No it is just a tool in payment stack and not a full financial system replacement.

• “Agents will autonomously build companies, raise money, make profits.” - No it won’t.

• “Zero friction, plug-and-play economy.”- In theory yes, but real adoption, trust, regulation, risk remain big.

This stuff is just people shilling. I see this being more unlikely; there are much bigger problems with agents that stop this being the case, but let’s talk about the pros.

The Pros (What is Real)

I genuinely find the following useful

• Programmable payments: Enables pay-per-use models (APIs, data, compute) rather than fixed subscriptions.

• Agent-friendly rails: One of the few protocols designed for machines to pay machines.

• Low dev friction: For developers, integrating might be fairly straightforward (middleware, small changes). And no signing up to API services everytime

• Network effect potential: If many services adopt x402, agents could easily switch between them, pay seamlessly.

• Onchain settlement: Uses stablecoins, blockchain rails for near-instant settlement, fewer intermediaries.

Before, there were a lot of different ways you can pay for things, and if this catches on and a lot of people actually start using it, it could be pretty big and widely adopted. The more people use it, with any network effects, the more powerful it becomes.

Companies are adapting it. Visa’s CEO now calls the company a “hyperscaler across the payments ecosystem”. While Mastercard touts a “multi-rail network for digital value exchange”. They’re all jumping on x402 big time.

On the Consumer Side

If x402 ever gets adopted widely, it could genuinely shake up how e-commerce works, though probably not in the way most people imagine.

What if you had an AI agent that could handle all your shopping for you? It compares prices, checks reviews, and even pays for what you need instantly.

The challenge, of course, is trust. Would you really hand your credit card to a bot? That’s the big risk here. Some might argue, “Well, that’s just Alexa or Amazon all over again.” But here’s the twist x402 could actually be more disruptive to Amazon than people think.

Amazon’s real strength is its delivery network, not its payment rails. But with people increasingly using ChatGPT-style agents to search, recommend, and buy things, a universal payment layer like x402 could let those agents buy directly from any site. No Amazon account, no subscription, no checkout page. Just “pay and done.”

The Cons (Biggest Real Limitations)

I spoke to a lot of developers around this. One big concern was speed.

• It’s slow. A transaction can take up to 2 seconds, which is an eternity for real-time API calls.

  You can make it faster by not verifying the transaction, but that does seem like a security concern. Keen to see what more devs make of it as it gets more widely adopted.

  

  https://github.com/coinbase/x402/blob/main/static/x402-protocol-flow.png

  

  https://x402.gitbook.io/x402/core-concepts/facilitator

• Validation trade-offs. Some services can skip full validation for speed, which creates trust and security risks.

• Prepaying might be required. To make it practical, many systems will need prepaid credits or wallets.

• It’s similar to MCP (Machine Communication Protocol). Not entirely new. It is just another attempt to create a universal payment layer.

For enterprise adoption of agents, the biggest blocker right now is trust and security, so I don’t think any sane business is going to hand an AI a blank wallet.

And this is exactly the kind of problem we’re trying to solve at Coral, the company I co-founded. We’re building systems that let you orchestrate multiple agents safely, so if an agent can pay using x402, you can also give it a budget.

Closing Thoughts

x402 is interesting because it hints at what the next layer of the internet might look like. But for now? 80% of it is marketing, 20% is real progress, which I think needs a fair amount of work to get something of actual value.

And that 20% is still worth paying attention to, as there are a lot of cases where it does make a real impact.

Connect with me:

• YouTube: @omni_georgio

• X/Twitter: @omni_georgio

• LinkedIn: romejgeorgio

Check out some of my other videos:

If you’re interested in building with x402: We’re actually hosting a hackathon around it, which is live now.

And I’ll drop some resources below on how you can get started building on it.