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Similar to the Clone Technique, this technique creates clones of the user, but these clones are actual copies, not illusions. The clones are capable of performing techniques on their own and can even bleed and simulate death, but will usually disperse after one or two solid blows or they can disperse on their own. The clones will be created in roughly the same condition as the original, meaning that previous injuries, such as cuts and scrapes, will appear on the clones.
The user's chakra is evenly distributed among every clone, giving each clone an equal fraction of the user's overall power. For this reason, shadow clones can not be distinguished from the actual person, even by the use of ocular powers, such as Byakugan and Sharingan.
A characteristic that is unique to the Shadow Clone Technique is that any experience the clones gain during their existence is transferred to the user once they are dispersed. This makes the technique ideal for spying, since the user can simply send a clone to spy on a target, then have the clone disperse itself without returning to pass the information back to the user. Any extra chakra the clone has when it disperses is also returned to the original if this method is used.
It's also useful for training purposes, since the total amount of experience the user gains is multiplied by the total number of clones being used to train. For example, if a user creates one shadow clone and trains together with this clone for 1 hour, then dispels the clone, the user gains 2 hours of training in 1 hour by adding the hours of clone and the user together; this particular feature is not revealed until Part II by Kakashi Hatake. When done with several hundred clones, like Naruto does, training that could take weeks or months can be completed in a few hours. While the technique can be extremely beneficial, attempting to use multiple clones for training purposes can be mentally harmful to the user, as hundreds of pieces of information returning to the user at once is very dangerous.
Because of the manner in which the clones are created, the user must divide their chakra among the clones, potentially using up all their chakra fairly quickly if the user is low on chakra or makes too many clones. This is especially problematic when the forbidden form of the technique, Multiple Shadow Clone Technique, is used; whereas the normal version will only create a few clones, the Multiple Shadow Clone Technique can create hundreds.
Naruto is able to use this technique to the extremes that he does because of the Nine-Tailed Demon Fox sealed within him, which gives him an abnormally high chakra level. Even without the Nine-Tails' chakra, Naruto can make quite a few clones, but nowhere near on the level he can when he has access to the Nine-Tails' chakra. The clones, however, are apparently more susceptible to the Nine-Tails' influence and can begin to transform unexpectedly. It should also be noted that while Naruto in his two-tails form in his fight with Deidara, the other clones seemed to be choking and dying as if the Nine-Tails' chakra was killing them. If Naruto creates any clones while in his Nine-Tails Chakra Mode, the Nine-Tails will absorb a portion of his chakra per clone, making it very easy for Naruto to die.