A ferrofluid (portmanteau of ferromagnetic, and fluid) is a liquid which becomes strongly magnetized in the presence of a magnetic field.

When a paramagnetic fluid is subjected to a strong vertical magnetic field, the surface forms a regular pattern of peaks and valleys. This effect is known as the normal-field instability. The instability is driven by the magnetic field; it can be explained by considering which shape of the fluid minimizes the total energy of the system.

From the point of view of magnetic energy, peaks and valleys are energetically favorable. In the corrugated configuration, the magnetic field is concentrated in the peaks; since the fluid is more easily magnetized than the air, this lowers the magnetic energy. In other words, the field lines prefer to run through the fluid, and they try to ride the spikes of fluid out into space as far as possible.

Meanwhile, the formation of peaks and valleys is resisted by gravity and surface tension. It costs energy to move fluid out of the valleys and up into the spikes, and it costs energy to increase the surface area of the fluid. In summary, the formation of the corrugations increases the surface free energy and the gravitational energy of the liquid, but reduces the magnetic energy. The corrugations will only form above a critical magnetic field strength, when the reduction in magnetic energy outweighs the increase in surface and gravitation energy terms.

Ferrofluids have an exceptionally high magnetic susceptibility and the critical magnetic field for the onset of the corrugations can be realised by a small bar magnet.

Ferrofluids have friction-reducing capabilities. If applied to the surface of a strong enough magnet, such as one made of NdFeB, it can cause the magnet to glide across smooth surfaces with minimal resistance.

Some art and science museums have special devices on display that use magnets to make ferrofluids move around specially shaped surfaces in a fountain show-like fashion to entertain guests. Sachiko Kodama is known for her ferrofluid art.

See also: https://en.wikipedia.org/wiki/Ferrofluid

Source: Wikipedia (All text is available under the terms of the GNU Free Documentation License and Creative Commons Attribution-ShareAlike License.)