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Dynamic
Dynamic TrueCrypt container is a pre-allocated NTFS sparse file whose
physical size (actual disk space used) grows as new data is added to
it. Note that the physical size of the container (actual disk space
that the container uses) will not decrease when files are deleted on
the TrueCrypt volume. The physical size of the container can only
increase up to the maximum value that is specified by the user during
the volume creation process. After the maximum specified size is
reached, the physical size of the container will remain constant.
Note that sparse files can only be created in the NTFS file system. If
you are creating a container in the FAT file system, the option
Dynamic will be disabled ("greyed out").
Note that the size of a dynamic (sparse-file-hosted) TrueCrypt volume
reported by Windows and by TrueCrypt will always be equal to its
maximum size (which you specify when creating the volume). To find out
current physical size of the container (actual disk space it uses),
right-click the container file (in a Windows Explorer window, not in
TrueCrypt), then select Properties and see the Size on disk value.
WARNING: Performance of dynamic (sparse-file-hosted) TrueCrypt volumes
is significantly worse than performance of regular volumes. Dynamic
(sparse-file-hosted) TrueCrypt volumes are also less secure, because
it is possible to tell which volume sectors are unused. Furthermore,
if data is written to a dynamic volume when there is not enough free
space in its host file system, the encrypted file system may get
corrupted.