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Installing Raspbmc, I noticed this question:

Would you like to install Raspbmc to a USB stick - note this still requires an SD card to boot from [y/N]

I read that it's not possible to directly boot from an external USB stick / drive.
What are then the advantages of installing Raspbmc to a USB stick and how do you use it?

Later edit: The Raspbmc FAQ also mentions:

Q: Can I install Raspbmc to a USB drive?

A: Yes — but the SD card will still be needed to boot. This may seem futile then, however, the performance gains are admirable. This can be done easily through the Windows installer. For users installing via Python or manually, all that is needed is to create a file called ‘usb’ on the fat32 partition. The installer will then install to the first detected USB drive.

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up vote 6 down vote accepted

The real only advantage I guess is space. The RPi has a SDHC spec. card reader, which allows SD cards upto 32GB. So if you want to add a 512GB USB pen drive, you can use that for the OS/files/etc and only boot from SD.

The reason to use a USB harddrive are besides space also speed, because these are much faster then any USB/SD memory. And they do not wear out as fast as USB/SD memory.

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I see SDHC card vs. USB stick/drive speed can make a big difference in performance, both in everyday use (video) and on install (video). Thanks! – Marius Butuc Jan 26 '13 at 15:25

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