First-time altcoin users come across a nuance that they don’t usually find in Bitcoin or Ethereum and tokens: some coins ask you for extra transaction details, often called destination tags or memo. Even ChangeHero uses them, so it’s important for us to explain it. If you are wondering, what is this additional information, where to find it and why it is so important, then this is a guide for you.
Key Takeaways
- Destination tags and memos are optional identifiers for a blockchain transaction. They are found in XRP, Stellar, Hedera, Cosmos and TON.
- They are usually used by exchanges or wallets to properly credit deposits to right users. Without a memo or tag, funds can be lost, temporarily or permanently.
- Destination tags and memos solve an issue when multiple user accounts use the same blockchain account (address).
Extra Transaction Details and Their Purpose
Most blockchain transactions that involve sending crypto are rather straightforward: you only need a public address of the recipient. It can be understandably frustrating if there is suddenly something else involved, like a destination tag in XRP. What even is that?
Destination tags in XRP and memo in XLM, HBAR and ATOM are additional information about the recipient that helps to identify each payment. Think about crypto exchanges using one blockchain address for many user accounts at once — they need these to properly credit your deposit to your exchange balance. This is just one example but it sufficiently demonstrates the purpose of a tag or memo.
Before we unpack what are some technical differences and security concerns involved in using them, let’s dive right into the most common cases that ChangeHero’s users come across.
XRP Destination Tag
An XRP destination tag is the extra identifier attached to some payments and it usually looks like a string of a dozen numbers. The destination tag’s purpose is to further identify each payment, when the on-chain methods do not suffice.
If the destination tag is not specified, your payment might get rejected at best, not show up for a while, or be lost altogether at worst. If a Ripple transfer without a tag goes through, the funds arrive but it can be hard to find them among many deposits with only a timestamp. Contacting support can help to resolve this issue by having them identify your transfer manually but adding a tag can save everyone time and effort.
To find out the destination tag, take a closer look at the page (if you are using an exchange) or tab (if you are using a software wallet) that shows your address. It should be provided alongside it.
How to Use XRP Destination Tag
Let’s take an XRP swap as an example. When you create an exchange transaction on ChangeHero, you have two options. If you can, you should provide your XRP recipient address with your destination tag in the first step. You can also tick the box if you do not have a destination tag — either your wallet does not require it or you accept the drawbacks.
If instead of receiving XRP you swap it, at the point when you are prompted to send XRP to a generated address, you will see both the address and the destination tag. To ensure smooth exchange, if possible, provide both when you are sending XRP.
So basically, to include the destination tag in a transaction, you should pay attention where to paste it and where to find it. Usually, it is on the same page. To avoid mistakes, you can paste the tag instead of typing it but since it is a short string of numbers, typing and double checking is quick.
XLM Memo
An XLM memo serves a similar purpose: extra-chain identifier for multi-purpose address transfers. They come in four types (text, ID, hash, return) and the difference between a tag and memo, aside from Stellar and XRPL being different networks, is that it can be alphanumeric (include both numbers and letters). If your recipient address does not start with M (muxed address), a memo is crucial so that your transfer is not lost.
Once again, memo is required when you make a transfer to an address that uses one blockchain address for many users. Usually, it is an exchange address, although some wallets may also require it.
How to Use XLM Memo
Unless you are using a muxed address (starting with M), you will need to find a memo. Normally, they should be provided alongside the recipient address when you open the page in your exchange settings or a wallet. It is not recommended to send to a muxed address if the platform does not support them: use a regular address with memo instead.
Because memo is alphanumeric, the chance of making a mistake is higher than for a tag. Pay more attention when double checking or paste it from the wallet if you can.
Memo is also required in other networks: if you want to exchange HBAR and ATOM on ChangeHero, depending on the direction, we will provide one or ask you to input a memo. If you do not have it for any reason, you can check the box when creating a transaction. Just keep in mind that including a memo alongside the addresses speeds things up and significantly reduces chances of a transaction failing.
TON Comment
Last but not least, if you are swapping TON or tokens on the network, you might have noticed a field for a TON comment. Is it the same as tags and memos?
Some platforms use this field for the same purpose as a destination tag: to correctly identify deposits with an off-chain registry of users or accounts. The comment field for TON is also optional and lets anyone attach any kind of human-readable information, as in blockchain messages.
We have two important notes about the TON comments: first, unlike tags or memos, ChangeHero does not require you to input anything in the field. If the TON recipient address requires you to include a comment with the address, you have the option but it is entirely up to you. Secondly, due to comments allowing any input, exercise caution as they can be used for phishing.
Something Extra about the Extras
Destination tags, memos and comments do not have a common term because at the end of the day, they are slightly different. They use varying formats and even differ in purposes. Most often, you would see them referred to as extra transaction details, identifiers, or just listed as they’re called.
There are also message fields in cryptocurrencies like NEM and in practice, they are very similar to TON comments. If the exchange or platform provides you with a XEM recipient address and a message next to it, it is a good idea to include both.
A message in Ethereum means something completely different: a piece of data sent between contracts. There are also block messages, like in Bitcoin, which is the extra data with any message the block producer leaves there.
Destination tags and memos may reduce the blockchain load by eliminating the need to generate an address for each recipient and transfer but there is a reason networks like Stellar phase them out. Solutions like muxed addresses make use of cryptography to essentially integrate the identifiers into a public address without the need to create a new one. One unique combination of a public address and a unique ID is definitely more user-friendly than having to handle them separately.
Best Practices for Using Transaction Messages
What can you do to handle transaction details safely and effectively? For one, treat them as a part of your blockchain address. A mistake in a memo can be as problematic as mistyping your address, so pay attention and double-check.
Other security best practices that cover your destination tag and the like are reducing reuse of your cryptocurrency addresses; paste not type, if you can; and don’t neglect these fields. If you are concerned about the possible harm these identifiers can do to your privacy, weigh it against the very real risk of losing assets for good.
Conclusion
All in all, having to type or paste something into an extra field can be a nuisance but ultimately, it is for your own benefit. With the memo or destination tag, your funds will arrive where you want them in a blink of an eye.
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