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View the Flash movie In this piece Chen deliberately masked the writing to make it difficult to read. "I don't want people to read what I'm writing," he explains.

The different "images" were actually a single photograph Chen took in Boston. It was then cut in pieces vertically, and at one point in the animation, it actually comes together coherently.
To get the transparency, Chen used alpha channels set to 20 percent opacity. When the layers cross over each other, you can look through it. The photo is deliberately grainy as well.
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