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I know it's possible and I do it all the time... But is this bad; are there any rules that NTFS shouldn't be on a flash drive? I ask because many of my devices performance takes a giant hit when NTFS is used on a flash drive. Once I go back to FAT32 everything is fine.

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NTFS is a journaling file system which means the OS records in a special file everything that it is about to do on a drive before it does it. This is used to improve consistency of the file system, but really bad for flash memory because adding a small piece of journal entry requires reading, erasing and writing a whole block on the flash (usually 4KB).

Also it is way more complicated to implement than FAT and gets less support outside the Windows world, so storage manufacturers usually format the drives to FAT.

You should normally use FAT32 on flash drivers unless you need to use NTFS features like large files, ACL, EFS, etc.

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exFAT is much more useful than FAT32 –  Lưu Vĩnh Phúc Oct 23 '13 at 2:56

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