Thread by @WietseWind

I believe there are some misunderstandings about Destination Tags on the XRP ledger.

A destination tag can be compared to an extension number, when calling a company. You can call the company, but you'll need to be put through to the right person. With the extension number, you can call someone directly.

It's the same with the XRP ledger and destination tags when sending funds. You reach the XRP ledger account, but the recipient doesn't know where to route (credit) the funds. Just like when you are calling a company: you call one number, but who do you want to speak with?

This is also the reason why exchanges / custodial wallets often (should be: always) require a destination tag (because they have one XRP ledger address and many users) and why your own on ledger account (XUMM, Ledger Nano, etc.) doesn't need one. Like your personal phone number.

No need for an extension number when calling your cell, right?

So: what happens when you send funds to an exchange without a destination tag? They simply don't know where to route (credit) your deposit. Like when calling a company: no extension? Explain who you want to talk to.

So when sending to a shared account (multi user wallet, like an exchange when depositing), it's safe to say you ALWAYS need to use a destination tag.

If an exchange ever forces you to enter a destination tag when sending to your own private account address (r...) enter 0 (zero)

There is a new address format for the XRP ledger that will eliminate entering destination tags: xrpaddress.info

It'll take time for exchanges & wallet providers to add support for the new "X-Address". Until everybody does, entering Destination Tags will still be a thing