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A hashtag is a type of tag used to describe topics on social networking websites, most notably Twitter. Hashtags, like all tags, are a type of metadata (data about data).
Twitter has popularized the use of the term hashtag, though there are some other social networks that use it. On Twitter, Hashtags give other users and indication what a particular tweet is about. Hashtags are indicated as such because they are prefixed with the pound symbol (#).
A tag is basically a keyword. It's a non-hierarchical method to describe something. For example, take an article that is about security and cloud computing. It would be tough to classify such an article in just one category. Using tags, you can describe that the content is about both topics and differentiate it from, say, an article on cloud computing and performance.
Here are some examples of hashtags:
It's also common to hear the term at conferences. Often the moderator will announce a hashtag so that all those tweeting can see the thoughts of the other audience members.