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Adam Smith was a memory-changing entity who could survive if people remembered him. He infiltrated Torchwood 3 and passed himself off as one of them.
Biography
Adam escaped from "the void" (possibly the Void), presumably via the Cardiff rift and made for the Torchwood team, as their memories were unique.
He inserted himself into all the memories of the team and though he had only come into their lives two days before, they thought he had joined Torchwood years ago.
Adam made Jack Harkness trust him with his secrets and re-awakened his memories of his lost brother, Gray from the Boeshane Peninsula (however, it is possible that some or all of these memories originated with Adam himself.)
He also made Toshiko Sato love him and believe that they had a close, physical and long-lasting relationship. He also changed the personality of Owen Harper, turning him into a nerdy romantic with a crush on Toshiko. Though he made Gwen Cooper regard him as a friend, as an unintended side effect, he made her forget about her fiancé, Rhys Williams. Ianto Jones noticed that Adam never got a mention in the logs that he meticulously took of his work. As retaliation for his suspicion and threat to expose Adam, he made Ianto believe he had murdered three women. The false memory of the serial murders drove Ianto mad; he reported this to Jack who saw Adam making Ianto remember him using the Hub's CCTV.
Jack threatened Adam with his gun before locking him in the vault. Jack then gave the rest of the team retcon pills to forget about Adam (after having deleted the CCTV recordings and other evidence). In a last bid to survive, Adam inserted himself into one of Jack's memories of his childhood. Jack then took an amnesia pill to forget. As nobody now remembered Adam he died. His body shimmered and disappeared into nothing. Although the Torchwood team had no knowledge of Adam anymore, some evidence of his existence remained: for example, his name was found on a bag containing an alien artifact in Torchwood's possession (which was in some way tied to Adam), and Rhys, having briefly met Adam, would have retained his scant memories of the man.
Powers
Adam survived only by people's memories of him. If he was forgotten, he would fade away. Adam inserted himself into the memories of others through touch. He would place his hand on the target's shoulder and merely say "remember". Inserting himself into people’s memories often wipes out other memories. (TW: Adam) Presumably, Rhys' memory of Adam was either too minor to sustain him, or did not count as Adam did not insert himself into Rhys' memories himself.
Behind the scenes
- Coincidentally, Adam's choice of the "generic" human last name, Smith, calls to mind the Doctor's own choice of John Smith as an alias.