External storage and disk space

I am planning to install Nextcloud in a cheap server (so it will have low disk space) and make an external storage my default place for files. When a file is uploaded, specially a large file, is it hosted temporarily in Nextcloud’s directory and then moved to the external storage or is it directly uploaded to the external storage?

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I believe it’s temporarily uploaded to the temporary folder set in your config.php file. Can anyone else confirm/deny?

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