Often, when transferring Monero (XMR) to an exchange, you may be asked to enter a payment ID (but some exchanges only need a digital wallet address, for example, Crex24). Binance, Bitfinex, HitBTC, Huobi, Poloniex and some other exchanges ask for a payment ID to make a deposit.
To successfully make an XMR deposit, you need both a payment ID and a digital wallet address.
Have you ever wondered why the exchange only asks for a payment ID for Monero deposits and not for Bitcoin, Litecoin or other cryptocurrencies? This is because Monero works very differently compared to Bitcoin and other altcoins.
In this article, we will explain what Monero payment ID is, what its purpose is and when to use it. But before we look at all that, here's a quick overview of Monero's privacy feature to help you better understand the need for payment ID.
Why is a payment ID required to deposit Monero on an exchange?
Monero (XMR) is a decentralized, secure, private and untraceable cryptocurrency. Its main function is to provide complete anonymity and privacy to users.
To ensure payment tracking, Monero uses Ring Signatures technology. This technology completely hides the source, destination and amount of any transaction. Unlike Bitcoin, Monero transactions are not available to the public.
In the case of Bitcoin and other cryptocurrencies, exchanges typically create a new address for each user account and even for each individual payment.
However, for Monero transactions it is not convenient to generate a new address for each user account. Therefore, exchanges use a common address to receive funds from different users.
Additionally, since Monero has a hidden address, there is no need for a separate address for each user account. Most exchanges will use one account address for all of their clients. However, since all deposits go to the same address, exchanges use the payment ID to determine who made the transaction.
Instead of using a different payment address, they will provide each user with a unique payment ID. This is a convenient tag that helps exchange operators distinguish between senders.
So, what is a payment ID and when should you use it?
Electronic money
In Russia, citizens use virtual accounts such as YandexMoney, Webmoney, QIWI wallet and other various electronic services. It is very comfortable.
When transferring from a virtual card to a bank card, difficulties often arise with the designation. Each electronic transfer that does not go through the system is designated “payment to”. The software does not distinguish between the intermediary company in such cases. The transaction was carried out by a company of foreign origin or has mixed characters in its name, then such transfers are not indicated.
What is Monero Payment ID?
In Monero, payment ID is an arbitrary transaction attachment. This is a hexadecimal string that is 64 characters (32 bytes) long. And randomly generated by the seller or exchange to accept payments.
Payment ID example:
e2db21395931e0e1b1d59320fbb41b666ad10f8d72e8553459e3a72a5b330fd6
You will only find the use of payment ID in those services that receive many incoming transactions to the same Monero address. For example, exchanges, websites and stores that accept Monero.
When receiving Monero payments, merchants and exchanges provide a unique payment ID to the person paying. Since all payment IDs are linked to a separate user account, it helps to easily identify incoming transactions.
Simply put, payment IDs help the recipient identify the sender. However, this does not identify the recipient.
So how to use payment ID now?
Blockchain technology and cryptocurrencies. Fast start
Get the book and learn all the basics of blockchain technology and cryptocurrency in one evening
- Wallet Seed;
- Mnemonic phrase;
- a pair of Private/Public keys;
- specific keys View key;
- clean and stealth addresses;
- one-time keys;
- Read-only wallets;
- wallets for Audit.
But the most important thing in the system for receiving payments is the Payment ID and Integrated Address. But first things first.
Payment ID is an address system that is not tied to the wallet itself. This is actually the receiving address that is entered into the wallet to receive transfers. Just as one PayID can have several wallets, one wallet can have several Payment IDs. This is important to understand...and even more important to keep your Payment ID in a safe place.
Wallet Seed & Mnemonic Phrase
Wallet Seed is local encryption that is used as a password. It is used together with a mnemonic phrase. It looks like this. Your password is encrypted using the CRC32 system, after which you receive a code word and a full code. It can be used both as a private key and as a login password.
Note: the system is very similar to using a similar approach with MD5 hashing. When the user receives an MD5 signature of the password and can verify it for integrity and truthfulness over time, then the password will be published. Such a system allows you to confirm transactions without revealing basic information about the owner.
The keyword can also be used to restore access if the main password is lost.
Private/Public key pair
One of the features of Monero Payment is asymmetric cryptography. In case of implementation into the system, the owners decided not to reinvent the wheel and use the classic pair of public and private keys.
The public key gives the right to view transactions, confirmations, and see movements by Payment ID. For example, it can be given to the receiving party to verify confirmation of the transfer, while maintaining overall anonymity. The private key is used exclusively for conducting transactions and must be kept in the strictest confidence by the owner of the wallet.
If necessary, you can create an unlimited number of public/private key pairs for each transaction. This will allow you to maintain anonymity even when transferring funds to fiat.
Specific View Keys
View Key is a technical implementation for verifying sent payments. In fact, it is an add-on to the Public/Private Key system - and can be built into cold wallets, or even act as a hasp.
Clean and stealth addresses
Without going into details, this is a standard technology that was used in BTC. In fact, each wallet has an unlimited number of open and closed addresses for receiving and making payments. Together with the system of using asynchronous encryption, this system provides a high level of ease of use combined with good anonymity of wallets.
One-time keys
Pair for a secure transaction. One key is sent to the receiving party - the transaction is activated only after confirmation by the keys on each side, after which the keys become invalid.
Read-only wallets
A public view of wallets based on a Public address is needed for companies that conduct bounties, or that must report on incoming funds. Allows you to view the history of incoming transactions, without specifying information about the owner.
Those. a person can use the key to see the balance in your account, but will not be able to manage it. It is necessary, for example, before concluding a transaction, in order to reassure the partner that there are sufficient funds in your accounts to carry out the operation.
Using payment ID to make Monero deposits
Before making any XMR deposit into your currency account, please ensure that you have entered your payment ID correctly.
On most exchanges, when you create a Monero deposit address, you will also be given a payment ID. Don't confuse them.
A Monero (XMR) address is 95 characters long and typically starts with the number 4 (additional addresses start with 8).
Example of a Monero digital wallet address:
496aKKdqF1xQSSEzw7wNrkZkDUsCD5cSmNCfVhVgEps52WERBcLDGzdF5UugmFoHMm9xRJdewvK2TFfAJNwEV25rTcVF5Vp
However, payment ID is generated from random numbers and consists of 64 characters.
Payment ID example:
e2db21395931e0e1b1d59320fbb41b666ad10f8d72e8553459e3a72a5b330fd6
All Monero wallets such as GUI, CLI, Cake Wallet, MyMonero currently support the payment ID feature (which will be deprecated in the future).
Monero GUI
Go to the layout settings and enable translation with the payment ID tag.
Now go to the sending tab and you will find the option to enable payment ID.
Monero CLI
When sending Monero from your CLI wallet, be sure to use the following format:
transfer [address] [amount] [paymentID]
Note: If you receive the following error, be sure to open the CLI wallet using the --long-payment-id-support command.
Error: Long payment IDs are obsolete.
Use –long-payment-id-support if you really must use one, and warn the recipient they are using an obsolete feature that will disappear in the future (Error: long payment IDs are obsolete. Use –long-payment-id-support, if you really need to use payment ID, and warn the recipient that it is using a deprecated feature that will disappear in the future).
In any case, as stated in your wallet, payment ID is a deprecated feature and will disappear in the future.
Incoming payment
Let’s assume that you recently received money on your card from a payment to subscriber, which was reported via SMS by the mobile banking system. You should not attach special importance to this circumstance, since this designation translated from English means “payment to...”.
Any bank card is linked to an account, and it is used to carry out banking operations (transfers, payments, debits). Funds can come to the account in the form of transfers. The purpose of the payment can be quite extensive (the long name of the organization that made the transfer or the characters used in the name have letters of foreign origin), so the phrase “payment to” is used. Therefore, money can come from anyone.
Integrated addresses
Since version 0.9, Monero uses built-in addresses, which are also called compact or short payment IDs.
An integrated Monero address is just your regular XMR address with some extra data. It contains the payment ID, encrypted and embedded in the payment address itself.
Using an integrated address is similar to using a payment ID. The exchange knows which user the coins originally came from. However, the advantage of an integrated address over a payment ID is that it carries all the information on one line.
Instead of providing a payment address and payment ID, users can use the built-in addressing feature. Thus, it becomes much more difficult for the user to fake the payment ID. However, there is a catch.
Many exchanges (even large ones like Binance) do not yet support the integrated address or compact payment ID feature. They only support old style payment IDs and in many cases users post XMR without a payment ID.
So, what happens if I accidentally forgot to specify the payment ID or used the wrong payment ID when replenishing my account?
Find out who sent the funds
Naturally, every subscriber has a desire to find out who transferred funds to a bank card with an unknown sender. You can find out who the receipt came from in several ways:
- It’s worth going to the nearest bank branch, taking your ID with you (preferably a passport) and contacting the operator to find out where the funds came from. Feel free to ask questions and get answers.
- When connecting a bank account, the client is connected to a personal account (online banking). It is there that, by indicating the date and time when this transfer arrived, it is possible to find out the sender of the amount.
- You should call the bank's help desk toll-free number and, indicating your individual data and code word, receive information about receipts. Some information (privacy policy) is not disclosed by employees via communication means (telephone, Internet).
- It is worth noting that it is possible to satisfy curiosity by using the information from the account statement. The notification can be ordered online or by phone call. The account owner will receive the statement.
If you expect your account to be replenished from the state budget (there may be various benefits or federal assistance to citizens), then use the funds without fear. In the event that income is not planned, you need to contact the bank.
No payment ID = no XMR (coins lost)
Whether you forgot your payment ID or accidentally used the wrong payment ID, XMR will be sent to any address you provided. However, as we have already said, without payment ID the exchange will not be able to recognize where the payment came from.
So what happens to my Monero deposit? Lost coins? It depends on how good the exchange's support team is.
Even if the support team is ready to help you, you need to go through the process of creating a support ticket, wait a few days and prove that you sent money.
In any case, in most cases you will lose Monero if you do not provide a payment ID. For example, check out this Reddit post where users shared their experiences with this situation.
Okay, what about withdrawals?
To summarize
Before the hard fork with the latest innovations, the Monero system got rid of the Payment Address. Now, if you are not an “over-hedging” person and you are not interested in complete anonymity, you can conduct transactions directly to the wallet address. To do this, you can use both Stealth and Public addresses. The system won't care at all.
Remember, Payment ID cannot be found out in any way if you lose access to your wallet. In fact, this is your network address, which allows you to conduct transactions and receive transfers without specifying the address of the wallet itself. It is due to this function that Monero, although not very convenient to use, allows you to achieve almost complete anonymity on the network, which can be important in many cases.
Should I use payment ID to withdraw currency?
The answer to this question depends on where you are sending the coins. If you want to withdraw coins to your personal wallet, you do not need to enter payment ID. This is completely optional, so you can leave this field blank.
In any case, the amount will be withdrawn from your wallet. Likewise, if you are sending a payment to a friend or another address you own, you do not need a payment ID. All you need to do is enter the correct wallet address.
However, if you transfer funds from one exchange to another, a payment ID is required. But also remember that some exchanges use an integrated address rather than a payment ID. For example, Kraken. So please check your exchange service or wallet provider before sending your Monero.
If you have any questions or doubts about this topic, feel free to leave your questions in the comments below.
Transfer from the terminal
Residents of Russia use the services of terminals (landline communicators) to top up their bank cards. Transferring money through a machine in a store is more convenient than going to a bank branch. The physical costs of performing the operation are minimal. Receipt takes place in a matter of minutes, and the percentage charged for the operation is not large.
It is worth saying that marks about the payment, as well as the transfer, in these cases are not provided by the recognition system. Some organizations that provide terminal services are licensed by banks. The agreement provides for the designation and reflection of transactions. They explained one transfer to you via SMS, but did not indicate another - this happens in the relationship between the bank and the company servicing the terminal.
Where can you store Monero?
One of the most common questions regarding this currency is “where and how to create a monero wallet?”:
- Creating a personal account on exchanges; this method does not require creating a Monero wallet. The user only needs to register on a specific exchange, be it Exmo or Binance. After registration, you will be able to interact with this cryptocurrency in every possible way without downloading certain software to your computer or browser. On the exchange you can trade cryptocurrency, sell it or exchange it for something interesting at a certain point in time. This method is suitable for those users who are constantly engaged in trading and do not want to regularly pay a commission for each transfer.
- Using the Monero wallet online is possible in MyMonero, which is the official developer portal. The main feature of such wallets is “security” - your data is not recorded on their servers.
- Download monero wallet windows. This option is suitable for those who want to store Monero, hoping to receive dividends from it over a certain period of time. Such software is also called “Cold Wallet”. Basically, it is downloaded for long-term storage of coins and this method is more effective than storage on exchanges, we all know how exchanges are broken and funds are stolen.
- Wallet from different developers. This method includes wallets such as Jaxx.
- The most secure option is hardware wallets (Ledger).
Which wallet for Monero should you choose? This is an absolutely individual factor, when choosing which you need to take into account the tasks necessary for the user. Long-term and not long-term, yes, traders use these words every day, and you must decide on this, since it is dangerous to store large sums on exchanges, constant hacking and closure of exchanges leads to loss of funds. I think after these words you yourself understood and decided for yourself which option is best for you.
What types of wallets are there?
When choosing which method will be used to store and use cryptocurrency, you need to know about all the possible options for Monero Wallet.
Let's study them in detail.
Online wallet
They create it almost instantly on the official website, and this is exactly what a beginner in cryptocurrencies should use. A cold online wallet is a full-fledged part of the network; it can be thought of as a bank, then Online-Wallet will be an account within the bank.
The owner of such a resource has some restrictions. Yes, you have complete control over the money, this is indeed very convenient, but the funds are still not stored with you, but with the “bank”.
Thus, there are risks of your money being wasted by the “bank”, the owner of a real cold wallet, inside which your online one is made.
But there is an important point: such storage is extremely convenient to use, which is why many people use it. In addition, if you transfer money from such a wallet to a similar one, the transaction will take place instantly and you will not be charged any commission.
Such repositories have prompt user support, the ability to link your credit card and when paying in stores with it, the money will be debited from Online-Wallet.
Here you will not encounter such concepts as public key and private key. You will log into the site using your username and password.
Desktop cold
It stores complete information about transactions. This type of storage is difficult to configure. If you do not have the necessary professional knowledge at least at the level of a system administrator, it will be quite difficult for you to create it.
A cold wallet includes concepts such as a public key and a private key. These are analogues of your address in the system, that is, it is a public key (the number to which you need to send money) and a private key, an analogue of a password.
To read: Breadwallet
Mobile client
The official Monero website provides a list of clients (they appeared quite recently) that you can trust because they are safe. This is a lightweight version of cryptocurrency storage.
Hardware
Option for a cold device for storing funds. It looks like an ordinary flash drive, but with a screen and buttons for generating a password.
Well-known hardware device developer Ledger Nano S has added Monero to its list of cryptocurrencies, so users have an excellent chance to use the most secure way to store their tokens today.
What is a Monero wallet
Monero Wallet is an electronic wallet for storing the cryptocurrency of the same name.
Its essence is very simple, it consists of two codes:
- one code is public. We call it to our partners or counterparty for the transfer of coins,
- the second code is the code for managing your wallet, that is, thanks to it, we send coins to our counterparties.
The first key we share with everyone who needs it is the address of our storage facility. The second key is private, and if it is lost, we lose access to the funds forever. Also, if someone steals this key from us, he will take all the money for himself.
There are two types of wallet - hot and cold. Hot is necessary for us to constantly use money, it is similar to cash in our real wallet. Cold is more like a safe deposit box in a bank or a bank account, when we cannot quickly and efficiently use it. As a rule, it is stored on external resources, for example, on a flash drive or on a computer.
When using a hot wallet, you need to understand that the codes are stored somewhere on the network and you need to take care of saving them. On the one hand, we get operational management of funds, but on the other hand, we risk losing all our cash, because hacker attacks take place.
The cold one is more secure and allows you to save all your cash, but in practice it is impossible to limit yourself to only one type, and users working with cryptocurrencies use both hot and cold electronic wallets at the same time.
What about security - how reliable is the Monero wallet?
We store a huge amount of important information on our computers, including access to exchanges and crypto coin storage. Modern technologies make it possible to steal data from your computer at a distance of thousands of kilometers.
The question arises, how to secure your assets? It would seem that the answer is obvious - use the hardware version. However, this is a gadget, and such devices tend to break, which carries increased risks.
Another option: store all passwords and logins on a separate flash drive and output them to your computer only when you need to get somewhere. The rest of the time you have it offline. But a flash drive can also be stolen. It is for this case that Monero is advised to use Ledger, since this device has the function of restoring access in case of breakdown or theft.
Experts advise taking care of the maximum level of security only if there are really serious amounts in your account.
Wallet Features
Monero Wallet is characterized by a high degree of anonymity, but in terms of security it is on par with other well-known storage facilities.
The owner has the right:
- Store cryptocurrency in it.
- Replenish it in various ways and withdraw funds from it.
- Accept payments from others.
- Make transfers.
- Receive funds earned during the mining process.
To read: Review of the CoolWallet S hardware wallet
The Monero website provides a list of mobile and lightweight devices for iOS and Android that are considered safe. The Monero community also recently launched dedicated hardware storage. The device is currently under development.
Another type of wallet typical for the Monero platform is View Only Wallet. It displays only incoming transactions. It cannot spend any of your tokens and there are no outgoing transactions visible. This makes view-only services especially interesting for developers writing payment verification programs.
