Laminated silicon steel
(left) Eddy currents (I, red) within a solid iron transformer core. (right) Making the core out of thin laminations parallel to the field (B, green) with insulation between them reduces the eddy currents. In this diagram the field and currents are shown in one direction, but they actually reverse direction with the alternating current in the transformer winding.
In order to reduce the eddy current losses mentioned above, most low frequency power transformers and inductors use laminated cores, made of stacks of thin sheets of silicon steel:
Lamination
Laminated magnetic cores are made of stacks of thin iron sheets coated with an insulating layer, lying as much as possible parallel with the lines of flux. The layers of insulation serve as a barrier to eddy currents, so eddy currents can only flow in narrow loops within the thickness of each single lamination. Since the current in an eddy current loop is proportional to the area of the loop, this prevents most of the current from flowing, reducing eddy currents to a very small level. Since power dissipated is proportional to the square of the current, breaking a large core into narrow laminations reduces the power losses drastically. From this, it can be seen that the thinner the laminations, the lower the eddy current losses.