As you can see, ferrofluid is a magnetic liquid.This is something special because all known magnetic materials lose their magnetization when they get too hot. And this always happens long before the material reaches it's melting point. The trick is to suspend tiny pieces of solid magnetic material in the liquid.Normally, solid particles mixed in a liquid will eventually settle to the bottom because of gravity. Much like mixing sand in water. But, if the particles are small enough (say 10 nm) they won't be pulled down by gravity. This is because of a force called Brownian Motion.Brownian Motion is the tendency of liquid molecules to be constantly moving around. As a result, they bombard other particles in the liquid. And when the particles are very small in size this force is strong enough to counteract the force of gravity.