The part of the nail inside the wood is not exposed to atmospheric conditions, whereas the remainder part of it is exposed directly to atmospheric air. due to differential aeration, the nail inside the wood (not oxygenated part) becomes anodic, while the upper part of nail (well oxygenated) becomes cathodic. Consequently, a differential current starts flowing, whereby the anodic part (nail inside the woo) gets corroded easily.
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