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The green dot is already known to Facebook: now it's on Instagram. It shows others if you are online right now. This is to facilitate the connection with friends, explains the subsidiary of Facebook in the official blog.
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The online status can only be viewed by users who follow or have already written direct messages. It is possible to hide your own status. The feature can be disabled under Settings> Activity Status. If you do that, you lose the ability to see who is online with your friends.
(tob)
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