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Formatting a hard drive is the act of erasing the contents of a storage device. Depending on what your goal is, there are several reasons why this action can be beneficial for you and your computer.
Matter of Necessity
When you install a brand-new hard drive, it must be formatted for the operating system you want to install. For example, Windows uses NTFS, and Linux uses ext3 or ext4.
Performance Troubles
Sometimes a computer becomes sluggish over the course of several months, and nothing you do seems to work. In this instance, formatting your drive and re-installing your operating system may be a good idea, as long as you have made backups of your personal data.
Security Troubles
Sometimes a virus or other malware affects your system, and all of your attempts to clean it off your computer are unsuccessful. In this event, formatting your hard drive may eliminate the problem, as long as the virus is not in the boot sector (which is not affected by formatting).
Partition Formatting
If you create multiple partitions, you can format them for multiple operating systems. This will allow you to "dual boot" Windows and Linux, or Windows and OS X.
Removing Your Drive
If you are recycling, selling or trading your drive, it's smart to format it beforehand, so that someone can't get access to sensitive personal information.
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