Destination Tag: What Is It? Do I Need To Use Them?

What is a Destination Tag/Memo?

Destination tags are a second layer of unique identification codes used by cryptocurrencies (e.g. Stellar and XRP) to accurately identify the receiver of a transaction. Most transactions with these currencies require both an address and a destination tag to be completed successfully. A Destination Tag/Memo is also known as an additional address and is often necessary for identifying a transaction recipient beyond a wallet address.

Why is this needed?

For these types of cryptocurrencies, most centralized exchanges use one address for all traders of cryptocurrencies that use Destination Tag technology.

Therefore, a Tag/Memo is used to determine what actual individual account a given transaction should be assigned and credited to.

What if I'm unsure if I need a destination tag?

You can also determine if a destination tag is necessary by sending a very small amount without a tag. If the transaction succeeds, then you can attempt sending a larger amount. If it does not, that indicates that a tag is required for the transaction.