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+In both the .git/annex directory and the git-annex branch, two levels of
+hash directories are used, to avoid issues with too many files in one
+directory.
+
+Two separate hash methods are used. One, the old hash format, is only used
+for non-bare git repositories. The other, the new hash format, is used for
+bare git repositories, the git-annex branch, and on special remotes as
+well.
+
+## new hash format
+
+This uses two directories, each with a three-letter name, such as "f87/4d5"
+
+The directory names come from the md5sum of the [[key|key_format]].
+
+Note that you cannot use the `md5sum` utility from coreutils to generate
+the same hash. Why it generates something else is unknown. The md5 hash
+libraries for programming languages will work though. 
+
+For example:
+
+	python -c 'import hashlib, sys; print hashlib.md5(sys.argv[1]).hexdigest()'
+
+## old hash format
+
+This uses two directories, each with a two-letter name, such as "pX/1J"
+
+It takes the md5sum of the key, but rather than a string, represents it as 4
+32bit words. Only the first word is used. It is converted into a string by the
+same mechanism that would be used to encode a normal md5sum value into a
+string, but where that would normally encode the bits using the 16 characters
+0-9a-f, this instead uses the 32 characters "0123456789zqjxkmvwgpfZQJXKMVWGPF".
+The first 2 letters of the resulting string are the first directory, and the
+second 2 are the second directory.