Memos give you the ability to communicate a message with money. Sometimes memos are crucial. Learn when you need to include one to prevent loss of lumens.
Memos expand the possibilities of what can be built on Stellar. They can enable relative anonymity, trigger specific secondary actions after a payment, and streamline operations for users and businesses alike.
Memos are not required to send a transaction unless specifically noted by the recipient (i.e. most exchanges).
Exchanges must monitor transactions on each account associated with their exchange. If they had one Stellar account for each lumen holder on their platform, this would increase their costs and minimum balances, which would in turn increase their fees and minimum balances for users. By using one or a few accounts and differentiating user’s balances based on unique memos, exchanges can reduce fees and the minimum balance.
Forgetting to include the correct memo in transfers into exchanges can result in a loss of your lumens. Be careful!
The Stellar Subreddit Tipping Bot uses the memo to identify which user is topping up their tipping account, and the Sputnik Wallet Watcher uses the memo to identify what email address to use when sending payment notification emails.
Memos power crucial features of many of the great apps built on top of Stellar.
If exchanges provided a unique Stellar address (i.e. firstname.lastname@example.org*bittrex.com) for each user and set up the federation server to automatically populate transactions with the memo ID for that user, the exchange’s customer service requests would significantly drop because fewer users would mistakenly send lumens without a memo ID.
Message your exchange asking that they implement federation!
Sometimes, the memo can be used for spam. For just 0.00001 XLM, someone can mass message Stellar users with a link or advertising message in the memo. If you receive a tiny transaction with what looks like a spammy message in the memo, just ignore and celebrate the tiny amount of lumens you just received.
Spam in the form of memos can be annoying, but it results in a little extra free lumens :)