The first step of the operation is to create a new layer. You can do this by going to the Layer menu and selecting New > Layer, by using the keyboard shortcut Ctrl + Shift + N, or by clicking on the New Layer button at the bottom of the layer palette.
Next we need to fill the layer with a 50 percent grey colour. In Photoshop you can do this by opening the Edit menu, selecting Fill and then choosing 50 percent Grey from the drop-down box. In other programs you may have to use the Paintbucket tool and manually mix the grey colour. If so, the RGB values should be 127,127,127.
At the moment you should be looking at a blank grey screen where your picture used to be, and wondering if you've done something wrong. Don't worry though, your picture will be back in a moment. In the Layer palette, click on the drop-down box for blend mode and select Overlay. This effectively treats the 50 percent grey as a transparent colour, so the layer should become transparent.
At this point Photoshop users have the option to turn the new layer into a Smart Object. This isn't essential, but it means that the program will treat the layer rather like an adjustment layer, and any adjustments we make can be amended later without having to re-do the entire image. To do this, right-click on the layer in the layer palette and select Convert to Smart Object.