I first heard about Twitter hash tags from Raven, who came up with a list of project management hash tags.
These tags allow you to search for specific Twitter content, like this.
Twitter tags are a mechanism for identifying content of a certain type to an interested group.
Hashtags were developed as a means to create "groupings" on Twitter, without having to change the basic service. The hash symbol is a convention borrowed primarily from IRC channels.
You can see some interesting usage patterns of hashtags on twitter here.
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