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The Hashtag plugin is used to automate the tagging of discussions in a similar way that Twitter and other sites work - when users create content that contain #hashtags, these tags are automatically used to tag the content and allows finding other similar content. The tags themselves are the standard Vanilla tags as enabled by the Tagging plugin.
There are two main aspects to this process:
1. Hashtag Recognition. The plugin uses the twitter syntax - a word prefixed by a hash (#) sign. While Twitter supports tags between 2 to 140 characters in length, the Admin configuration screen can change the length parameters. The admin can also specify whether hashtag recognition is limited to the Discussion title or the Title and the bodies of the discussion and subsequent comments.
2. Hashtag Linking. This process recognize #hashtags within the discussion and comment content (whether they were used to create tags or not) and link them to other discussions sharing the same hashtags. This feature requires that the "Garden.Format.Hashtags" in config.php be set to false (otherwise Vanilla will use the hashtags as text-search links as it does on this forum - see #this link).
The plugin requires permission settings in Roles and Permissions which provides the ability to limit the plugin functionality to selected users (e.g. moderators).
1. The Tagging plugin adds a side panel with the list of popular tags. I use the "Module Sort" plugin to place the popular tags high on the side panel.
2. I set the length of the tags to be between 4 and 30 characters to prevent automatic recognition of short and very long tags. That does not interfere with users ability tag discussions manually without that restriction.