Coinbase is fully betting on stablecoins: building the payment infrastructure for the AI economy, can the x402 protocol lead the encryption payment revolution?

Coinbase has strategically placed stablecoins at the core of its future development. This article provides a deep analysis of how Coinbase is building a crypto-native payment rail for AI applications, machines, and automated software services by launching the x402 open source protocol and hosting developer hackathons, aiming to challenge traditional payment giants such as PayPal and Visa, while seizing the historic opportunities presented by U.S. stablecoin legislation.

[Strategic Core Shift: Coinbase Views Stablecoins as the Center of Everything] Coinbase has made a significant strategic decision to position stablecoins as the cornerstone of everything in the future. The company is betting that these digital dollars will become the financial engine driving AI applications, robotics, and automated machines, and has already begun actively promoting the realization of this future. According to Bloomberg, during a hot weekend in August, Coinbase held a hackathon event in Brooklyn.

About 100 developers from places like Malaysia and Italy gathered to create tools that allow software to send and receive payments using stablecoins. The developers built various prototypes, such as a publishing platform that instantly pays authors for their articles, a chatbot that charges a few cents per answer, and a group chat marketplace where users can buy and sell without touching traditional finance. The core of this event is to build financial infrastructure for AI systems that need to handle payments autonomously, enabling them to automatically purchase services, pay for cloud costs, and conduct microtransactions around the clock.

[x402 protocol: Coinbase builds a payment backbone network for the AI economy] Coinbase is trying to lead this transformation through x402. It is an Open Source protocol named after a long-unused internet error code "402 Payment Required". It is designed for bots, applications, or any networked software, enabling them to use stablecoins for instant billing and settlement over the internet. Whether it's paying a few cents for AI tools or a few dollars for digital content, the goal is to achieve real-time payments without relying on PayPal, Visa, or bank wire transfers.

Nemil Dalal, who is responsible for the Coinbase developer platform, stated that this strategy traces directly back to the "secret master plan" written by Brian Armstrong nearly a decade ago, which began with speculation, then shifted to infrastructure building, with the ultimate goal of establishing a completely open global financial system. Nemil said, "It is no exaggeration to say that this is exactly what we are doing now. We are now in the age of applications. People are creating a large number of different applications. Then we will see a lot of new things emerge from this."

During the Brooklyn hackathon, developers were encouraged to use x402 in their projects. Ben Reilly's team integrated it into a chatbot that can charge users directly. Ben stated, "The killer application in the encryption space is very clear, which is stablecoin payments." His teammate Alvaro Echevarria Cuesta provided a simple reason: "Building stablecoin payments over the entire financial system gives you more freedom compared to being constrained by Stripe, PayPal, and all their limitations."

[Competition and Regulation: The Track is Crowded but Congress has Cleared the Path] Coinbase is not fighting alone; the competition is becoming increasingly fierce. Stripe has acquired a stablecoin infrastructure company called Bridge and is currently developing its own blockchain. PayPal has already launched its own stablecoin, leveraging its large user base to drive usage. Meanwhile, Visa and Mastercard still possess decades of accumulated merchant systems, regulatory capital, and global influence. The developments in Washington are prompting Coinbase to act quickly. This summer, the U.S. Congress passed the first law regulating stablecoins. It mandates that issuers hold reserves and provides a clear legal pathway for developers to build on it. This legal clarity is attracting more builders into the space. Vishal Gupta, a former executive at Coinbase and Circle and a judge at this hackathon, candidly stated: "Whenever there is clarity, it can drive the next wave." Vishal is now running a company called True Markets, which also supports stablecoin payment systems. His perspective is that encryption is no longer just about trading; it is becoming something people can use. He said, "We can actually use some of these native encryption rails in real consumer products and real B2B products."

Conclusion:

Coinbase's strategic shift clearly reveals the profound evolution of the cryptocurrency industry from mere speculative trading to pragmatic infrastructure building. Stablecoins, with their price stability and encryption-native characteristics, are being viewed by giants as the key fuel driving the next generation of the internet (especially the AI economy) for automatic payments and value transfer. Despite facing fierce competition from traditional fintech giants and challenges from changing user habits, the clarification of U.S. regulations undoubtedly provides a significant first-mover advantage for compliant participants like Coinbase. The construction of the x402 protocol and developer ecosystem is a crucial step for Coinbase to break free from its reliance on trading business and attempt to become a rule-maker for the future global open financial system. For developers and investors, focusing on innovations in payment infrastructure based on stablecoins, as well as new business models arising from the combination of AI and the encryption economy, will become the core perspective for capturing the next explosive growth point.