Creative Flux

Pierson Marks (00:02.588)
Hey.

Bilal Tahir (00:03.694)
Hey, how's it going?

Pierson Marks (00:05.319)
Good, good. Welcome to Creative Flux, episode 15. 15, I know, big, big. I'm Pearson.

Bilal Tahir (00:09.71)
15, woo, yeah.

and I'm blown.

Pierson Marks (00:16.251)
And Creative Flux is the podcast where we dive into everything around generative media, images, video, worlds, music. So we just talk about all that stuff and leave all the deep coding to the other guys. But sometimes that comes in here too. So there we have a bunch of things to talk about. lot of stuff that happened in the world. mean, last week we talked about things like, what do we talk about? World labs. We talked about

I even forget what else what else we

Bilal Tahir (00:48.92)
Yeah, we go on tangents a lot, I guess. We talked about Nano Banana for videos, like we could edit stuff. remember Ray 3, which had just come out, which was really good. yeah, mean, every week seems like new models are released, new capabilities are unlocked. you know, just... Is there so many...

Pierson Marks (00:56.379)
Right.

Pierson Marks (01:08.091)
Right. It's so sick. know. And being at the forefront of this, it's cool. It's our job to kind of stay aware of what's going on in the tech world because...

There's so much alpha to do that. And so that's like, you know, we're trying to share this with everybody who's watching this or listening to this wherever they are consuming it. Hopefully podcast form, you know, podcasts are the best, but maybe it's on YouTube as well. But this week was cool. So there was you said, Suno V5 came out.

Bilal Tahir (01:42.444)
Yes, it sounds really good and I don't have a Sunna subscription but I'm on the verge of getting one just to play more with it because yeah I do think this is a

At some point, I knew this was gonna, we're gonna get models good enough that we're gonna get the first Billboard 100 AI native song. And I wonder if soon V5 could beat that one. I mean, it definitely has a shot because some of the songs I've heard are just basically, for me, for my untrained ear, as good as any other song I've heard that's made it big. But you're more of a, I know you have a more refined musical taste than me, so what do you think?

Pierson Marks (02:26.789)
Well, so far at least. So I listened to Suno 4.5. I don't think I have a subscription. Yeah, no, I don't. I just logged into Suno just to make sure I wasn't paying for a subscription. But yeah, V4.5, I think. Was it V4 or V4.5? 4.5, yeah. That was pretty good, honestly, especially for electronic music was solid because the thing that...

Bilal Tahir (02:45.912)
Yeah, there was 4.5 as well. Yeah.

Pierson Marks (02:55.847)
You could always kind of get that AI feel with lyrics, whether it was the lyrics sounded cheesy, which was a problem with like Suno V3. Lyrics were cheesy. And then four came out, lyrics were better, melodies were better, and it had less of that AI feel. 4.5, I don't remember the difference between 4 4.5 really, but I'm excited because I think genuinely

Music theory is there are rules to music theory. It's music is kind of it's an art but it's also science in some ways because it's actually like keys and things and so I think that's very possible to be trained on with a lot of data but lyrics are different because when you're singing it's much more continuous so out of key and the key that you sing in it's just

You could be deep. There's just so many things that you could do there versus like actual instrumental music. So instrumental music, think we're at, we've passed on Candy Valley. mean, it's indistinguishable from whether or not it was a producer sitting behind Logic Pro or Ableton making music or using Suno. I think we've kind of been there, especially for like basic instrumental tracks.

Bilal Tahir (03:52.77)
Right, yeah.

Bilal Tahir (04:01.934)
Mm-hmm.

Pierson Marks (04:17.221)
And I listen to those all the time actually from AI, like AI instrumental tracks. So.

Bilal Tahir (04:20.27)
Yeah, yeah, I think with the lyrics, you're right, there's still a input requirement there because, it's like you said, like, you know.

it's hard to quantify or come up with a metric on what verse hits or doesn't hit. Although I mean, sometimes I hear some AI generators, I'm like, oh damn, that was deep. maybe, because deep is in the mind of the beholder, as they say, right? mean, it's like, know, lyrics aren't like objectively, you know.

Pierson Marks (04:47.591)
Bye bye.

Bilal Tahir (04:54.158)
they create an emotion based on the person that's hearing and how they're interpreting it. That's what art is. And so I feel like...

Definitely for the first AI native, when I say an AI native song, I don't mean like, I think more likely than, it won't be like some random dude like me who creates it. It'll probably be an artist who understands music, who has taste, who, you know, probably adds the right amount of input and gets the output, you know, really gets the output, you know, max, maximum output out of the model. So there's still, it's a hybrid connection, you know, for sure, know, human and.

machines coming together.

Pierson Marks (05:33.039)
Right. Totally. Yeah. It's super interesting. We'll see. I wonder when the next top 100 AI generated song will be when we get the first one and what what genre.

Bilal Tahir (05:46.092)
It'll be even funny if it's like it's a they market it as a human and then they it was actually AI or something, know, piss people off.

Pierson Marks (05:54.064)
I would this and this and this is an interesting thing too because there's a lot of criticism on AI generated text and.

video and images, watermarking, invisible watermarking. So I think ChatGPT was starting to put in these invisible characters into outputs just so you can watermark that this output was generated by AI, not by a human. Same thing with meta. I know that there is an effort across the industry to...

put like steganography something that is inside the actual image data that represents kind of like a signed key saying this was like created by like who created this was it created by Apple like taking a iPhone like when your iPhone takes a photo there's a lot of metadata in that photo but you could also sign those images so if this was created by Gemini or if this was created by whoever like an actual camera or phone you can actually have you know who created this so

Bilal Tahir (06:33.326)
pray.

Bilal Tahir (06:55.884)
Right, yeah.

Pierson Marks (06:57.033)
I wonder if that would be the same with music because the record labels, I already see this on Google right now, like they came down.

Bilal Tahir (07:03.822)
yeah, mean, we'll definitely have cryptographic signatures and built in all sorts of media, images, videos, audios. The thing though is like, there's open source models and the genie is out of the ball. And for sure you'll have people who don't want that to be able to generate media without the signatures. Now, so it doesn't...

This is more of a, it mitigates maybe widespread more like for the mainstream guy, you know, to prevent him from generating like, you know, a banger without giving credit to the studios, but there will be ways around it. And same with probably existing media. There's there'll probably be services where like you can remove watermarks on images. You'd probably have something which takes an audio passes it and maybe add some sort of filter on it that adds white noise and confuses the signature. Like, you know, this adds noise to

Pierson Marks (07:33.084)
Right.

Pierson Marks (07:55.451)
Alright, totally.

Bilal Tahir (07:56.244)
the signature itself interrupts it. yeah, I mean, this has been a battle that's been going on since the Napster days and even before that, so, you know.

Pierson Marks (08:03.911)
Yeah, it'll be interesting to see also how Spotify and the distributors, the music distributors embrace or not this type of content. I know Spotify has been pretty open to say, hey, we don't care. We want to if it's AI generated, whether it's podcasts actually or music or things, they're like, hey.

Bilal Tahir (08:19.694)
Yeah.

Yeah, I think they lean in. I wouldn't be surprised if try to acquire Sonor, UD or one of these big companies. Just acquire, be like, all right.

Pierson Marks (08:29.563)
That'd nuts.

Bilal Tahir (08:31.212)
Come in the Generate, I think I read a story maybe last year was how Spotify actually, especially for Lo-Fi, it's quietly started pumping more Lo-Fi songs in their algorithm. And the reason is because most Lo-Fi is AI generated and so you don't have to pay royalties. So for them, they actually make more money. They prefer you listen to Lo-Fi rather than listen to a Taylor Swift song. And so they've started creating these AI generated Lo-Fi lists that are in-house and recommending them. And a lot of people are pissed about that.

Pierson Marks (09:00.014)
super interesting.

Bilal Tahir (09:01.697)
that's probably going to happen with pop songs and stuff because for them margin is everything right so they'd rather you listen to a generate songs

Pierson Marks (09:04.295)
Pierson Marks (09:08.443)
it's so interesting. I didn't think about this because yeah, I mean, like you're taking away the power from record labels. If the content that Spotify is promoting is content created within the Spotify ecosystem, not through a record label. Like if I went on to Suno or Spotify for musicians, you know, and just created a song and posted to Spotify and Spotify pays me out as a creator, you know, and just incentivizes me to do it. And they pumped my stuff to people like because my daily mixes or whatever. mean, I just listen to whatever

Bilal Tahir (09:29.132)
Right.

All

Bilal Tahir (09:34.904)
Yeah.

Pierson Marks (09:38.277)
played there. There's a few songs in there that are normally would have been like a big musician from a record label but now they're replaced by Spotify artists or musicians. It just starts to save them. Yeah, wow. Interesting.

Bilal Tahir (09:49.602)
Yeah. yeah, mean labor, human labor is the big thing, right? Same with Uber and robotaxi is the same. Right now we just, every company is, whether they admit it or not, they're like, all right, the human expense needs to go.

Pierson Marks (09:57.148)
Hmm.

Pierson Marks (10:07.399)
No, totally. Well, and this is interesting too, because it's kind of segues we're talking about money and the compensation. I know you just were taught you were using this new payment protocol. I don't know if you would call it payment protocol, but it's X 42, which is for for X. Yeah, yeah, 402.

Bilal Tahir (10:18.338)
Right.

Bilal Tahir (10:22.786)
For our duty, yeah.

Yeah, yeah, I like 42 to me. They should like probably reserve that header.

Pierson Marks (10:31.36)
I think all the HTTP codes under 100 are reserved, right? Is that what it is? I don't know.

Bilal Tahir (10:35.564)
Yeah, yeah, yeah. Yeah, no, I mean, it's super interesting. kind of, I guess backing up, before I dive into the forward to technicals and stuff, want to, here's my little philosophical story, which I think to set it up. And I think it's pretty cool because about 10 years ago, there was this very famous economics professor, know, Ashwin Damararan, who I...

Pierson Marks (10:44.295)
Right.

Bilal Tahir (10:57.518)
I respect a lot, I think he's phenomenal, he's a world expert at valuation. Well, he put out this, basically he looked at Uber's stock price at the time. was a private company, but he looked at the valuation and it didn't make any sense to him, because what he did was he basically said, all right, let's be generous. Let's assume Uber gets 100 % off all the taxi market.

And so he took the TAM, the total addressable market of all the taxi market in the US. And he said, let's assume Uber gets all of it. And then he looks at the valuation of Uber and Uber's valuation is way higher than that. And he's like, this doesn't make any sense to me. So Uber is totally overvalued. That was his thesis. He puts it out there. Obviously, he's a world expert in valuations. A lot of people start talking about it.

A legendary venture capital by the name of Bill Gurley, who was at Benchmark, who happened to be the lead investors or one of the lead investors is an Uber at this time. He puts out a rebuttal to this. And he puts out a blog post about why the economics professor is wrong. And his basic argument was, professor, professor. I'm perhaps saying, he didn't say that, but he said.

Here's what you don't understand. You assume the total addressable market stays the same, but what you underestimate is that when people have a totally frictionless way, like people who had to call a cab, wait for it, get in the cab, then go from A to B, who would never call that cab in that scenario, now can just go on their phone, tap it, and be like, yeah, I don't wanna walk the three blocks, let's just get an Uber. You underestimate how that frictionless behavior is going to unlock

many more use cases for Uber, same with like groceries and stuff, and so you don't take that into account how the market itself will grow because of the ease of use. And fast forward 10 years, and Bill Gurley was right, I because Uber basically, if you had invested, as Jason Calacanis will keep repeating, you would have made a lot of money being an investor in Uber. So I guess I love this story because there's a lot of, think,

Pierson Marks (12:51.729)
Right.

Pierson Marks (12:59.963)
Yeah

Pierson Marks (13:04.817)
Great.

Bilal Tahir (13:09.964)
lessons I draw from the story, know, based on my whole investing journey as well. But one of the reasons I wanted to bring up this story is because I believe we are basically at this paradigm again with agents.

Every time we've talked about agents, most of the time, whenever I talk to people, they'll be like, oh yeah, agent's gonna book a hotel for you and agent's gonna book flight for you or a restaurant preservation, blah, blah, blah. And they're talking human to agent, like interactions. I believe that the agent to agent interactions are gonna be hundreds, if not thousands of times more than the human to agent economy. And the reason is because of what we were just talking about, the frictionlessness, because we'll just be able to have millisecond level

easy agent-to-agent interactions and it'll just happen at the nanomillisecond scale that you know humans you know just don't operate at and so that's why the economy will be way bigger because of that and I think one of the big

things that will unlock this is going to be a seamless payment system for agent to agents. we've had, and this is where I think crypto is going to play a huge role because just right now making a small micro transaction with you like, Hey Pearson, you know, I like that jelly bot hat. I get it? You're like, all right, well I'll ship it to you, right? Okay. Okay. Let me set up a sprite payment link. Oh, they take 30 cents and 5%. So I'm going to charge you like at least $10. Otherwise it doesn't make sense for him.

Pierson Marks (14:38.727)
Totally.

Bilal Tahir (14:40.656)
So it just creates such a hurdle for us to have this transaction. Whereas with crypto, I can instantly send you like, let's say five USD, C or whatever, right? And you can just hit me the hat.

And so I think crypto is gonna play a huge role with agent to agents and Coinbase realizes, and one of the things they put out recently, which I think is a step towards this world is 402, as we mentioned before. So what is 402? So 402 is basically, it's actually an old header, method, reserved head method in HTTP land since the 90s. And it's basically a payment method. It's a method which you use if you want to require payment.

if you call the Poro2 method and it can say, if you give me a payment, I'll accept it. If not, I'll reject it immediately. So it's just a seamless way of using fetch with a payment validation built in.

Pierson Marks (15:35.611)
Right.

Totally. I want to just nail this down just for people that may not have an understanding of like how this works. Just to take it one quick step back because when you're using the internet...

You make you as a user, your browser makes requests to a server. And when you like look at your Instagram feed, essentially your app is saying, hey, I request my feed, all those images, give me back all those images. Right. And so you're requesting a resource on that server, which is those images, and then they download and then they show up on your app. Right. And that's like a normal request and response on the Internet. And that.

Bilal Tahir (16:05.09)
Right.

Pierson Marks (16:19.503)
Response has a code that code is 200 saying, okay, status is good everything.

Bilal Tahir (16:21.272)
Right. Right.

Bilal Tahir (16:26.115)
Right.

Pierson Marks (16:26.375)
in the 400 range, that means that there is some issue if it was 400, 401, 402, 403. So back in the day when HTTP was first created, they reserved certain codes to say 401 means this, 402 means this, 403 means this. And so if you are Instagram and you're on your phone, you're scrolling and you say, hey, give me those images and it returns 401, it was like, hey, there's something

that went wrong.

You need to do something as the client like hey like fix like re-sign in or something's going wrong. 402 is specifically for hey you requested this thing but you can't get this thing until you pay us. And so it was like 402 meant payment required. So when you make a request the server responds with 402 saying hey payments required you have to follow this step to pay. And that was just never implemented. It was it sat there it was reserved.

as a status code but nobody used it until now. So I just wanted to make sure that we clarified that.

Bilal Tahir (17:32.194)
Right. Yeah. Yeah. No, that does a great explanation. And the reason it was never used is because we pay using banks and stuff. And so when Stripe came along, it was a great innovation, but Stripe was a rapper on banks because what it does is you call

Pierson Marks (17:39.366)
Right.

Bilal Tahir (17:45.486)
the Stripe API, you say, here's $10 and Stripe under the hood will has, you know, goes to a merchant bank or Visa or whatever and says, oh, and settles the transaction for you. With crypto, you can basically, you know, use a blockchain and you can do a transaction and then you can send that to the forward to header and they like, that's like, here's my proof of payment. I did the payment, you know, give me the resource. And the cool thing about using HTTP method versus if Coinbase had come up with

own SDK is like HTTP is universal so it doesn't you know you can use it using in coinbase you can use it in Voo, React doesn't matter it's a universal standard so a global standard like you know supported on HTTP so it's literally the internet supports it and so the flexibility that it enables for for any agent like a Chinese agent from a Chinese lab talking to an agent from a human like you know it just works

Pierson Marks (18:44.434)
Totally. It's and so and I want and I also like one of the so like the four or two when I said when you request a resource you get a four or two back saying payments required in that response. So there's a address right. Like what's in that response. So allows me to actually fulfill that payment without going through stripe or a bank like could you like explain that like what how does that actually how does the actual transaction get fulfilled there.

Bilal Tahir (18:45.564)
So, pretty cool.

Bilal Tahir (19:14.274)
Yeah, we should like, I should show the demo of the player and stuff because actually it does a better job of showing the headers. yeah. Let me.

Pierson Marks (19:21.906)
Let's do it. mean, that's that's that's that's you want to screen share real quick. So if you're if you're listening on Spotify, we'll upload the video should be here as well. But just if you want to watch the demo, pause it, come back, look at it. We'll still talk through it. Don't worry. But. Yeah, it's super. Yeah, we talked about this before and with MCPs, agents.

Bilal Tahir (19:34.328)
Yes.

Bilal Tahir (19:40.93)
Yes.

Pierson Marks (19:49.641)
payments, the economy, like going back to the whole thing about just the total addressable market of the economy. It's so interesting because right now the lowest

Like we have automations, have machines, we have factories, and those operate pretty autonomously with human oversight. Like you have a car factory and there's no one human controlling those arms. The assembly line goes down. But humans are still very much required in the software world. And when you enter into a world where software is very easily producible by AI,

You could have agents writing their own software interacting with other agents doing business functions that typically are required by humans to do like your entry level data engineers. You could have agents running 24 seven writing code analyzing data that operate like a factory.

Producing intelligent insights that next morning when the human comes into the office like hey like your agent was working all night on this Here's the report and the agent also had access to a wallet and the ability to pay So like if you're an investment bank and you're an analyst your entry-level analyst You have an agent that when you go home at 5 p.m. Or 9 p.m. Or wherever you go home as a investment bank banker Your agent next morning has worked all night while you're sleeping to

take what you finished and you know maybe it went to go look at some interesting data like there's maybe the agriculture data like by the or the US Department of like forestry or the forestry department and they had this paywall where said hey for every row of data you need from us pay us one tenth of a cent

Bilal Tahir (21:44.014)
Right.

Pierson Marks (21:44.189)
And the agent has a wallet and it can go off and do this. And it has, rather than having just intelligence, it has capital. I think when you mix in an economy, you have intelligent labor or just like physical labor. You have some sort of labor and then you also have capital. And those are like the two things kind of required in most, in most circumstances to, to create capital and labor. And. Right.

Bilal Tahir (22:07.586)
Yeah, it's a proper economy. It's a goods and services, like you said, like, you know, you're requesting resources and you can like.

Create cool stuff. You can get your own agent to maybe, you know, take your voice, create a blog post and pay ball and be like, rather than going on sub step or whatever, you can just say, you pay me 10 cents or a dollar and you can access my blog post or whatever, or for training data, you can sell your data. You're like, Hey, you can have my data, but you know, just pay me a bit every time you crawl. So this is a good example. So where sell has a starter, you know, we'll link it to, but I like this space. They have API playgrounds. So what they show is like they have two examples. They have a math calculator.

Pierson Marks (22:33.458)
So, I'm going to

Bilal Tahir (22:43.184)
And this one has a 402 fetch method enabled. So when you try to do a calculation, what it does is it says payment header is required. The network we are using is BaseSypolia. So this is all based on the base network, which is Coinbase's Ethereum EVM compatible network. And BaseSypolia is the testnet. it's the testnet, you know, and the main...

In blockchain, there's mainnet and there's testnet. So in theory, would be the mainnet, and they have different testnets where you can go test stuff if you don't wanna work with real money until you're ready. So BaseSypolia is the testnet of base. And you have other stuff like the resource.

Pierson Marks (23:27.078)
And base is a cryptocurrency. Is it a cryptocurrency or is it a like what is base? It's a blockchain. So you'd pay with Ethereum here.

Bilal Tahir (23:31.022)
No, it's a blockchain. It's a blockchain. It's the coin, USTC, which is also compatible with it. It's an EVM compatible currency. But you can see there's payment required. So now you can enable payment in which under the hood, basically you send the payment and you get a resource back. And so you get three, which is like, guess one plus two was what the math we were doing here, but you can see.

Pierson Marks (23:37.8)
USCC.

Bilal Tahir (23:59.566)
the header response, the payment address. You can see the transaction probably as well. There should be a transaction. Maybe, yeah, maybe the, yeah, this is the transaction ID. So you can go check it on the block scan, like, okay, the transaction happened. There should be a max payment, a max amount required too. So you can set up max payment as well, right? So here, I guess it's a five, this is probably five cents, I'm guessing, because it's in...

a unit, it's like a million units or whatever. But yeah, so you can have different constraints on ID. So I think this is cool, right? I mean, you can have different services and stuff. And I actually played around this myself. And so what I wanted to, I'll kind of show you. What I like, I wanted to build like this app where you can, I can sell my jokes. And so this is.

Let's see, let's see if it shows up. I don't know if it'll work. it says basically, the app's called Nickel Joke where you pay a nickel and you get a joke back. so let me, so you have to connect the wallet first and.

Pierson Marks (25:16.904)
So do you think like Chrome, like, you're gonna kind of need to be in the web three ecosystem for, I mean, for this right here where you go to a website, you click connect wallet. I was always kind of like weirded out, not weirded out, but I'm just like, connect wallet, like what is that doing? What do mean you're connecting to my wallet? I was always kind of just like, gave me an icky feeling.

Bilal Tahir (25:35.896)
Yeah, I mean, that's the hurdle right now. It's, you know, people are don't, I mean, you have to have a wallet and stuff, which can be, I guess, annoying. Why is this not connecting?

Pierson Marks (25:52.828)
Vibe-coded cryptocurrency nickel jokes.

Bilal Tahir (25:55.33)
I know this is working for but let me see

Pierson Marks (25:59.443)
But we love live demos, that's what it is.

Bilal Tahir (26:02.279)
okay, because I have it here, maybe.

Bilal Tahir (26:11.374)
I

Bilal Tahir (26:15.98)
interesting. okay, I see because I have to.

Wait, let me change the screen because it actually is on my other browser.

Bilal Tahir (26:33.56)
I'd be able to.

Bilal Tahir (26:47.466)
man, that sucks. Yeah, I won't be able to do it on this browser. That sucks.

Wait, maybe I can do a window.

Bilal Tahir (27:15.31)
Let's see, does this work?

Pierson Marks (27:19.656)
Infinity mirrors. Don't worry, I'll clip some of this.

Bilal Tahir (27:22.638)
Yeah, no, it's like, do you see this? Okay, so let me connect. Okay, this connected now. So let me just do a surprise me. And you can see this pops up. It's asking for a five USDC transaction.

Pierson Marks (27:41.842)
Coinbase has a wallet now on your browser which is nice. nice.

Bilal Tahir (27:44.768)
Yeah, CoinBus wallet and stuff. And so you get a joke back, which I can reveal. This is just a fun...

Hey, this is my joke. I'll try to break it and I can download it and stuff. And so, yeah, so that was a flow. the idea was that you can, like imagine that could be a service. You could be a Jelly Pod podcast that you're selling for a dollar. It could be a blog or something. I feel like there's so much potential here.

Pierson Marks (28:15.656)
Thank you.

And so I want to like, think the question that people are going to ask is like, why does this matter? Payments already accepted on the internet, right? And you're so. So it's like right here, it's like I have you didn't have to enter in your billing information. You don't have to go through a checkout flow. You didn't have to create an account. There's no.

Bilal Tahir (28:27.82)
Right. It's the seamlessness, like, you know, that's what's the key.

Pierson Marks (28:41.382)
like Stripe imposes fees, so Stripes and banks impose fees on credit card transactions and everything. So what's like 30 cents? No, it's like two point something cents plus. What is it? Whatever, like there's a few cents, so you can't.

Bilal Tahir (28:46.904)
Right.

Bilal Tahir (28:51.677)
Right, right, yeah. It's a minimum of 30 cents or 2 % or 3 % fees or whatever it is. you can't really do, if you wanted to do less than 30 cents of a transaction, you can't really, because I mean, the transaction fee itself is 30 cents, right? So we've never really had a work where it's possible to do like a one penny transaction or something, so.

Pierson Marks (29:13.264)
Right, totally, totally. And that's why you see credits where people top up credits and then they debit your credits on like an account because when you do...

Let's say when you go to a foul or replicate, you top up, you pay $100, they'll take $100 from your credit card. And then now they own a balance of like $100 in the foul ecosystem. And then they can debit you, know, one cent or whatever, because the transaction that went to Stripe was only a hundred bucks. They paid the 30 cents and then they could just debit as whatever you want. But that just becomes an overhead for companies where now you have to manage credit infrastructure.

Bilal Tahir (29:53.678)
Mm-hmm.

Pierson Marks (29:53.723)
And so you can't just like have an agent says, Hey, you can't just like set up within probably an hour, just accepting one cent transactions to do something. Like I, I see it super cool. Like think about right now we use an email provider called Resend. It kind of gets expensive, right? And we pay them every month for managing a, an, an address, a bunch of email addresses and the ability to send out emails independent of whether or not we used it.

Bilal Tahir (30:12.184)
Mm-hmm.

Pierson Marks (30:23.716)
And I could just see like a lot of like serverless like taking serverless to one more level where serverless was this idea where I didn't have to as a business. I didn't have to buy servers and manage servers and actually worry about all the intricacies of scale up scale down everything. It's just like hey I write a program and I throw it on this serverless infrastructure that just runs it they've handled everything.

scaling up scaling down everything but on the payment side we're kind of still in the server aspect where you have to manage credits you have to manage like scaling up to make sure that you're pricing everything but if I could just say hey I can accept as much or as little because you just have to pay me and it just

the transaction is fulfilled without having to set up Stripe and set up your banking and have a middleman in between. That's really cool. So maybe we're entering the world of serverless payments kind of.

Bilal Tahir (31:22.274)
Right. Right.

Yeah, I agree. think that's a great analogy. And to be clear, just like some jobs require servers and other require servers, there will be a use case for both because one of the downsides of these micro transactions, there's no, like if you feel like you've been defrauded or something, there's no such thing as charge backers, because there's no party you can go to, And that's where I imagine what's going to happen is, I think it...

you'll have some sort of threshold. you decide, hey, you know what, anything less than 10 bucks, I don't need the guarantee. Even if I lose $10, it's whatever. So I'd rather have no fees and pay $10 and take the risk of a chargeback, like not having the ability to do a chargeback. But anything more than 10 bucks or $100, I actually want the bank to have my back. And I actually want to go through the old channels. So I think for most people, we have that threshold, where under a certain threshold,

micro transactions like Venmo versus above that, you you go through, you use a credit card and you pay a fee for it.

Pierson Marks (32:25.714)
So do you think, I mean here.

Do you see Visa or MasterCard kind of implementing this on there? like imagine right there on your website you had nickel jokes. You click Connect Wallet, Visa or whatever. Rather than Connect Wallet, could be like Connect Card or Connect Wallet. You click that button and you have your credit card. Instead of using Coinbase Wallet like you showed in the browser extension, you have like Visa Wallet and Visa then they would just...

Bilal Tahir (32:51.768)
Right.

Pierson Marks (32:58.002)
Do like they would convert they would either have a balance on your credit card and like crypto or they have their own like I wonder if like you'll see the card networks try to come in and just give you the flexibility of like hey we could just use crypto to pay this transaction and bypass for like small ones or.

Bilal Tahir (33:17.03)
yeah, I totally see that they will definitely get in on the game. They've actually been interested. I'm sure they'll partner with Circle or one of these other companies that we already talked about. And to come to your point, you just mentioned first, we are still very early. The fact that had to, you were like, wait, we had a wallet and you have to connect it. It's annoying. mean, in the real world, what would happen is I see your page, I go and I click.

Yes, and I get the joke, whatever, right? And I think what will happen is this technology will get baked into the browser or under hood where maybe you set up like, like you, know, like right now in Chrome, I can set up a virtual card. Like my credit card is saved in details in my Chrome browser. So if I go to a checkout page, I just auto-fill my credit card, right? I think it should be that simple. should, my crypto wallet or whatever, I should not need to set it up. Like it actually took me even, and I feel like I know a lot about crypto.

It was very annoying setting up the test. I actually had to set up a new network because it's not an Ethereum network. It's a base network, then a test net. Then I had to send the money via faucet and all this stuff. And I'm like, this is so ridiculous. I should just.

have it in my browser and be able to seamlessly go to any site and use it. And so I think that's what's going to happen. That's how mainstream usage will happen. It'll just be baked in. Maybe it'll be a Visa service or something. And under the hood, maybe they use blockchain or not, but we shouldn't care. It's like HTTP or even under that, TCP, right? We don't talk about the TCP protocol. We're like, no, we're just chatting.

Pierson Marks (34:47.804)
Mm-hmm.

Pierson Marks (34:51.376)
Right. I wonder if this to like, cod code, like the SDKs, agent SDKs will.

So like I think that makes total sense for the Claude code SDK to have an inbuilt tool where, example, like if you're using Claude code, it can call tools and all this non deterministic stuff. Like you tell Claude to go, hey, I want to do this goal. You tell it a fuzzy goal. Go write this software program for me or go right. Analyze the Stadard, go on the Internet and search for this person. And it calls tools throughout the process. It's like non deterministic.

like, like, I found this person. Let's look on their LinkedIn page. And then you just do all these like tool calls. It's not a deterministic takes a long time. It's spinning its wheels. And eventually it gets to some some output that hopefully is good enough to say, hey, I did a deep research on this person. Here's their whole profile and blah, blah, blah. And that was what I requested as a user for Claude to do. But I wonder if in the SDK in like not the model layer, but the SDK that wraps the model.

will have just kind of built in, hey, if you want to initialize the cloud code SDK with a wallet and give it permissions to send payment when it experiences a 402, hey, just give me your secret key or whatever you need into the SDK. then it will just, maybe it'll say, don't ever send more than five cents per transaction. You have some safeguards, but.

Bilal Tahir (36:23.222)
I see that and it's funny because you said because the story itself, they literally have an MCP for 402. So they actually launched it with an MCP, which makes sense to your point, like, you know, it should just be under the hood. Maybe you talk to Claude and then it has access to all the tools and understands the, you know, the actual transaction logic and stuff, you know, so.

Pierson Marks (36:43.624)
I think that's the key. I think that's so big because right now when you use API's like.

Bilal Tahir (36:49.357)
Right.

Pierson Marks (36:49.64)
If MCP is going to be the way forward for agents to interact with services versus API's like MCPs I mean you're gonna have to I think it's going to be really cool just to wrap that MCP server as a K if you want to do this one thing or you want to fetch this one piece of data you have to bring along one cent or something you have to pay to use this and It'll be interesting. I you know how we talked about in the past. It's a Tory MCP like that react generator for images and

Like I can just totally see just like I built the MCP server. Anyone builds whatever MCP server and when you request to do the thing to generate the image, I just wrap that with the 402 the response and then you have to just send me the one cent to generate the image.

Bilal Tahir (37:38.456)
Yeah, no, it's for sure. And I wanted to show the other screen the starter has. So this is pretty cool. What they do is this is a chat app, but this is, they have access to an MCP, which has got access to a wallet, right? And it's calling 402. So I asked the question, what's my account balance? It replies 117. Maybe for this one chat, it costs certain amount of money. Well, I guess it doesn't, but.

I like, so maybe it'll be something like that where you are chatting with Claude or whatever, and then it uses the tools like the 402 method to go. Maybe it's just, you you can say, buy me a nickel joke and you don't worry about setting up the wallet and stuff. It's already set up with the agent and it does do that. So this is interesting.

Pierson Marks (38:26.237)
I bet you what happens here is that like chat GPT and open AI.

If 402 becomes supported as the payment framework, what I bet you you'll do is open AI is going to make you top up your balance and they will say, like give Chachipiti 100 bucks, whatever. And then if we, if Chachipiti goes out and needs to access MCP servers, they'll pay behind the scenes with 402, keeping your actual transit, like keeping your actual US dollars and like investing.

like Robin Hood whatever they know they do they just have a balance of a lot of cash.

Bilal Tahir (39:03.5)
Right, yeah. But no, so for sure. By the way, did you see what just happened here? It was very cool. I called, I said generate a random number between one and 10, which is a paid tool called getRandomNumber.

It replies with an error, which is similar to the one we showed before where we didn't have enable payment, where it says, generating a random number requires a payment of 0.001 USDC. Would you like to proceed? I said yes. And then it calls it again, and it uses the payment, and it pays the tool.

So see, this is like a glimpse into the future where your agents will, this is not quite agent to agent, but this is agent to human part where your agent goes, maybe it does an action, but then it can ask you for confirmation and it just does it, right? And it uses the 402 method seamlessly for it.

Pierson Marks (39:56.456)
I haven't read the spec of this. just from what I just see here is what happening behind the scenes. If you scroll up, it says, OK, forward to payment required and the response there is like, OK, pay to that address. So you have that address 0x7839. And so what happened when you said generate payment authorization. So what's happening is that me as the client, I'm paying the point zero zero one cent and then I'm respond. I'm recalling that same tool with like a receipt.

Bilal Tahir (40:12.323)
Right.

Pierson Marks (40:26.379)
saying, yes, I did pay this. Here's how you can check this. And then the MCP server will go with that, look up that receipt, say, hey, did that transaction complete? And if it did, then it'll authorize and then respond back. Is that what's happening or is it? Okay.

Bilal Tahir (40:39.128)
Yes, right. Yeah, yeah, exactly. And because it's a universal standard, your MCP tools, like imagine like going to Shopify and figuring out, Shopify's method, if you don't pay, this is the exact Shopify message versus Amazon message. With 402, the tool, it's deterministic enough, you're gonna get the same exact error, so you can be very confident.

in your MCP that, you know, if you see this error, that means I need to tell my user, hey, for this field, this is the amount required. Should I go and then pay it, right? And then you can recall the tool with the exact, so I guess what I'm trying to say is because it's a universal standard, we can have more confident in making these payment transactions and the back and forth because it's like the same fields over and over again, right? So.

Pierson Marks (41:11.081)
Right.

Pierson Marks (41:26.557)
Right. No, it's.

Bilal Tahir (41:27.822)
and then it calls it again, and then it gets the exact same, like this is the exact method response it's gonna get. So again, deterministic, boring, structured logic, is 99 % of the future agent work.

Pierson Marks (41:41.992)
Right. And it's going to be super interesting because I mean, like we're showing us and we have.

Because whenever there's a paradigm shift in anything, we think about it in the worldview that currently exists. So we were thinking about anything and like, okay, what exists today? And how does this new technology fit into how we interact with things today? So right now, like, you know, the demo that you just showed was purely, hey, I have a chat interface, it responded with the 402. I responded, yes, pay the one-tenth of the cent to...

to add that number and then it did the thing. And it was like traditional, it's a chat interface, it's the current world, but in the world of agents, right.

Bilal Tahir (42:17.452)
Right, yes. And this is a simple flow, right? But it's kind of like if this then that, you can make it more calling. Maybe I'll say, hey, I wanted this, whatever watch or something. If it's less than a hundred bucks, buy it. But if it's more, you need to send me a text or ping me and let me know, hey, okay, it's actually 110. Are you sure? Should I buy it? And then maybe I say, okay, yeah, buy it.

So you can have this logic in this loop where it's almost like having an assistant. It's kind of like having an executive assistant, which rich people have, right? You give them a structure, you're like, all right, I need this and that. And then call me if the amount gets to a certain amount because you don't want to confirm. But it's kind of like having your own assistant basically out there.

Pierson Marks (42:39.911)
Right.

All right.

Pierson Marks (42:55.891)
Totally. Yeah, it's super interesting. And circling this back to like, I didn't complete my thought earlier about the email stuff. Like, yeah, we use an email service. You pay a lot of money every month. It's a subscription based and we do this. imagine if your agent to complete a task, going back to like the investment banker.

Bilal Tahir (43:06.21)
Yeah.

Pierson Marks (43:15.561)
example, like the agent was like, Hey, like, there's a person that I found on LinkedIn, it seems like the perfect person to ask them a question. I need access to an email send. Like, how do I send the email? Maybe I have connected to your own Gmail. Cool. But maybe I don't. And there's another reason why but resend over here, they have an email send service.

you wouldn't want to necessarily have to pre configure every tool for the agent of access to if the agent says, like, resend says, if I send them one cent, I can send one email. And I'm just going to go up to them with the 402. Okay, send this email for me. Here's your one cent to send that email to that person and come back. And so yeah.

Bilal Tahir (43:48.974)
Mmm.

Bilal Tahir (43:56.43)
Yeah, no, absolutely. And I totally forgot about this point, but this was one of the, I think the core reasons I'm excited about this is like, are just live in subscription hell. And I understand where it comes from because, know, recurring revenue, you know, we understand that we're in the business of it, we're SaaS ourselves, but it is as a consumer, it is just so annoying. Like we were talking about Suna, we started this conversation about Suna, about, oh, should we upgrade or not? I would rather just pay 10 cents

Pierson Marks (44:13.715)
Like, right, right, right.

Bilal Tahir (44:26.318)
Let me use Suno V5, 10 cents if I like it. Maybe I pay you another 50 cents, whatever, for five more songs. I don't like the commitment. I hope this is maybe I'm being too naive, but hopefully we get, with this new economy, we get a pushback to the subscription tier services we're just inundated with right now where we have a Netflix subscription, we have an Amazon subscription, we have so many subscriptions. Rather than that, I would rather just have a set amount. I'm like, this is the amount of, I want to watch

This is my $15 for shows this month. You I refuse to go over this. What can I buy with $15 worth of shows or movies, whatever, right? And I just have budgets, mini budgets for everything. So.

Pierson Marks (45:08.681)
Yeah, and this change, know, this is like the innovator's dilemma and this change will not come top down. This will come bottoms up where you have startups that come in and disrupt because they can offer a service that maybe is equivalent to some incumbent, but the incumbent service is $20 a month where this one's like, hey, it's free to use, but every time you generate a song, it's just gonna cost you five cents and you don't have to pay a subscription.

Bilal Tahir (45:31.526)
Yes, I mean, that's totally legit. Literally just copy, Slack, copy, whatever. I mean, like, it's literally the same thing, but no subscription. You just pay on demand. I mean, honestly, we don't really even need crypto for that. And I understand, you know, why there's certain reasons it doesn't work. Maybe at scale, maybe with enterprise, like they actually do like the contracts and stuff, you know, know, as we know.

But still, I feel like there's a legitimate use case for a lot of B2C apps at least, and maybe even B2B where people would just literally, if you give them 90 % of the features with no subscription, they will take it and they will pay. And a lot of times they'll actually end up paying more because of the flexibility. It's like serverless. Sometimes your service bill is way more than if you had just gotten a server, but I rather pay more service just because I don't have, I'm on the hook for paying X dollars a month and it can scale up and down. Exactly, right.

Pierson Marks (46:22.505)
Because it's scales, incentives are aligned.

Bilal Tahir (46:26.914)
So yeah, interesting generative media tangent we went down there.

tying this to gender and media, I I think this is how it enables us to tell each other's Maybe I generate a Jelly Pot podcast or a video or something or a short and I put it up there and I'm like, hey, you can have this, you can either view it for this sense or you can just buy it outright for the copyright for this amount, right? And you can have a whole economy based on that, just user stories and content media.

Pierson Marks (46:59.219)
No, totally. think this does, I think this pairs so well with agents and doing tasks enabling with money, but also with generative media. I think this would be super cool where you could see, hey, this generated image for like 1 10th of a cent. And nobody's going to even think about it. It's just going to generate, generate.

But that will be interesting because I sometimes still struggle to see why this can't be done with just the credits model unless it's purely for, somebody can whip up an app really quickly without having to think about payment infrastructure, without having to think about Stripe or billing, maybe even like Stripe doesn't exist in the country that the person's developing in. Some countries still don't support Stripe or whatever, and crypto is that.

Bilal Tahir (47:45.848)
Right, Yeah. Well, think about the example I showed you, If I had to do this, which it is, I would need auth because, know, I would definitely need auth. Then I would need a Stripe link. But let's say I can get around auth by having you pay and then maybe you generate a coupon, which you can then have a credit. But how would I track?

Pierson Marks (47:54.185)
You need it all.

Bilal Tahir (48:07.342)
like, you know, like I would need a user. So that already, you know, adds like a backend or something like that versus that was literally just like a page that's a client side app. Right. So, so I feel like there's definitely in a way you're outsourcing the database to you. Cause what is the database is your wallet. It's you. Right. And yes. Yeah.

Pierson Marks (48:08.553)
Sure.

Pierson Marks (48:21.533)
Totally. It's good.

Pierson Marks (48:31.209)
And it's privacy centric too, which is cool. It's like you don't need a store, like as the world moves more towards, hey, every single piece of data, these would be deleteable and like all the cookie banners and all this pain, you know, that's unnecessary in the internet today. But if you don't even collect it in the first place, you don't need off, you don't need to protect information because you never get it in the first place. So it's cool.

Bilal Tahir (48:50.934)
Right, right. Or, and if you need it, like you can have pseudo anonymous identity where you can generate a wallet, use it, transact it. It's like having a virtual card, correct your number. And once you're done, delete the wallet or move on, right? And I do think actually that'll be a huge case. It's almost like we talked about, you know, when we talk about auth and sub, like RLS or whatever that this table is access to this site. Well, in the finance world, you can have, scoop it out. You can have a wallet put in 20 bucks and you can get, or this sketchy website.

Go crazy with that, the worst case scenario, can get hacked my wallet. I can lose this 20 bucks, but this is a very isolated, you can create the blast radius you want for transactions. And I think that's very powerful for sure.

Pierson Marks (49:32.201)
Alright.

Right, right. No, super interesting. This episode took a really fun tangent because we started off with music that we got into payments and there was other stuff that happened in the world, but I don't think we'll get to it today.

Bilal Tahir (49:48.148)
I know what's going on, but tune in next week and see us continue.

Pierson Marks (49:52.905)
Tune in next week because like we say every time it's like we didn't get to some stuff and then we'll say we'll talk about next week and sometimes we do and sometimes we don't. And so it's just a roll the dice. We'll see. Yeah.

Bilal Tahir (50:03.744)
I don't know, just too much new stuff coming out. So, you know, what are you going to do?

Pierson Marks (50:08.094)
But yeah, this inspires you, if you're watching this and you're inspired by 402 and payments and like the opportunity, please leave a comment. It'd be really interesting to see like what your thoughts are, any ideas you have on how this could be used. yeah. So follow, stick around, follow us next week. Yep. Okay. Take care. Bye.

Bilal Tahir (50:23.81)
Yep. All right. All right. yeah. Take care, guys. Bye.