Destination Tag in Ripple is a special identifier used for conducting transactions. To accept payments instead of creating a separate wallet address for each sender, you can use only one account, even if the number of transactions is very large. It is by adding this tag that you can identify the sender because it will be added to the address of the specific payment.
For example, you have a client base information, with a unique tag for each user. When you need to get a payment from a particular user, you give them the address of your cryptocurrency wallet and the Destination Tag. They assign it to the address at the time of sending the transaction – so you can understand what exactly the user has received funds to your account from.
The official Ripple site positions the Destination Tag as a nine-digit numeric code that is unique and is assigned to new wallets. This tag carries additional information about the transaction from a specific user.
The Destination Tag is generated by the user to further identify the data. If the system obliges the user to enter a Destination Tag, and he ignores this action, then the funds sent can be credited to the overall balance of the platform, rather than to a specific account of the recipient. In some cases, the use of Destination Tag is not necessary, for example, in the case of using cold storage resources that assign a personal address to the user.
Among the Destination Tag distinguish several types:
- Direct – allows you to match the user and wallet;
- Source – designed for outgoing transactions in the event of a refund;
- In the form of quotes – their validity is limited;
- One-time – generated directly by the user.