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I was reading today about electromagnetic induction and eddy currents. But while reading I was unable to differentiate between induced current and eddy current.

What is the difference?

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When you use an induction cooker, the eddy currents that are induced in the bottom of the pan heat your pan, and thus your food. In this case, "eddy currents" are a desirable thing; this shows how reasonable it is to get confused about the "difference" between the two concepts/terms. – Floris Aug 29 '14 at 20:22

Eddy currents are one case of electromagnetic induction, usually an undesired one. In this case, a varying magnetic field causes current loops in the bulk of the conductor. For example, some transformers have two coils of wire around a common iron core. When we apply AC current to one coil, there is an induced potential across the second coil that can generate induced currents if the ends of the coil are shorted or hooked up to a load. This is the desired operation of the transformer. However, at the same time, there are current loops being induced in the bulk of the iron core and we would call those eddy currents. The eddy currents are undesirable because those currents will be dissipated into heat, wasting that power instead of allowing the first coil to efficiently transfer power to the second coil. This is why transformer cores are laminated (i.e. made of sheets glued into a stack with non-conducting glue) to prevent large, power guzzling eddy from forming. See the wikipedia article on transformers.

The comment by @Floris brought to mind an extreme case of eddy current damage. Search for "coin shrinking", for example see the video here. The eddy current actually distorts the metal.

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Very good. Small addition: Not only does it drop the efficiency of the transformer - it limits the power handling capability of the transformer (stuff starts melting...). – Floris Aug 29 '14 at 20:15

Eddy currents are induced circular currents in conductors exposed to an AC magnetic field. The term is often used for induced currents that cause unwanted heating and losses in conductors, e.g. in transformers and electrical machines. On the other hand, they are also being put to good use in eddy current brakes and inductive heating.

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They don't need to be "circular" to be "eddy currents", but yes they are usually induced in solid pieces of conductor in the presence of changing magnetic fields, and they are almost invariably considered "nuisance" currents - to be avoided / mitigated. They are a big deal in MRI machines, where a rapidly changing gradient field induces (decaying) currents that affect the field strength sufficiently to affect the imaging performance. – Floris Aug 29 '14 at 20:14
@Floris: Thanks for the correction! You are right, circular is too strong an attribute, I should not have used it. With regards to MRI... the induced currents from the gradient coils will even cause the sensation of a mild electric shock. I was quite surprised about that during my last MRI. – CuriousOne Aug 29 '14 at 20:17
Yes - there is a thing called PNS: peripheral nerve stimulation. In fact, you have to be careful to keep the legs of a patient from touching (skin on skin - making a continuous conductor): the "loop" it creates can cause quite a current to flow. – Floris Aug 29 '14 at 20:20
@Floris: Hah! I knew it had a name! Thanks for the added color. Do you happen to know the skin depth (pun!) of these currents? I was wondering about that, but too lazy to estimate it. – CuriousOne Aug 29 '14 at 20:31
Another desired use of eddy currents; if shredded waste is run past a changing magnetic field, all conductors, ferrous, Al, Cu, etc. are flipped out as the magnetic field from the eddy current interacts with the original field... – DJohnM Aug 29 '14 at 21:07

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