Eddy Currents are little circles of electricity created when metals are moved by magnets or even when magnets are moved by metals. To understand this practically take a regular piece of cardboard and drop it in between a horse shoe magnet. It drops normally with out being effected by the magnet. This is because the cardboard does not conduct electricity. Therefore it does not cause any eddy currents. But instead if you use an aluminum piece in the same way, it falls very slowly, because aluminum conducts electricity. So energy that should normally cause the aluminum drop down is taken up by the little circling electrons called eddy currents. This video demonstrates the concepts of eddy currents by practically showing you how it effects metals and magnets.
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