The proliferation of AI agents and IoT devices is giving rise to a new machine economy, where autonomous agents interact and transact with each other. In this economy, the ability to make small, automated payments is crucial. The x402 protocol has been proposed as a standard for such micropayments, leveraging the HTTP 402 Payment Required status code to create a simple and interoperable payment flow. However, x402 transactions, which typically use public blockchains like Ethereum, are fully transparent. This lack of privacy is a major obstacle to the adoption of x402 in many applications, as it exposes sensitive information about the participants and their activities.
This paper proposes z402, a privacy-preserving micropayment protocol that combines the simplicity of x402 with the strong privacy guarantees of Zcash. Zcash is a cryptocurrency that uses a novel form of zero-knowledge cryptography called zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge) to enable shielded transactions. In a shielded transaction, the sender, receiver, and amount are all encrypted, while the validity of the transaction is guaranteed by a zero-knowledge proof.
The key innovation of z402 is the Zcash Facilitator, a service that acts as a bridge between the x402 protocol and the Zcash network. The Facilitator generates unique, single-use shielded addresses for each payment, and then uses zk-SNARKs to verify that the payment has been made without learning any of the transaction details. This allows for a completely private payment flow, where the only information revealed to the server is that a payment has been made.
The central component of the z402 protocol is the Zcash Facilitator. The Facilitator is a service that acts as an intermediary between the x402 client and the Zcash network. It is responsible for generating shielded addresses, verifying payments, and generating proofs of payment.
The z402 transaction flow begins when a client requests a resource from a z402-enabled server. The server responds with a 402 Payment Required error, providing a URL to a Zcash Facilitator. The client contacts the Facilitator, which generates a unique shielded address. The client makes a shielded transaction to the provided address, then requests a proof of payment from the Facilitator. The Facilitator's Zero-Knowledge Verifier checks the Zcash blockchain and generates a proof of payment, which the client submits to the server to gain access to the resource.
The z402 protocol is designed to provide strong privacy guarantees for all participants. By using Zcash shielded transactions, the sender, receiver, and amount of every payment are encrypted on the blockchain. The Facilitator's Zero-Knowledge Verifier can confirm that a payment has been made without learning the sender or the amount of the transaction.
The z402 protocol is a novel solution for private and autonomous machine-to-machine payments. By combining the simplicity of the x402 protocol with the strong privacy guarantees of Zcash, z402 enables a new generation of applications where privacy is paramount. We believe that z402 has the potential to become a key enabling technology for the private and autonomous machine-to-machine economy.