Stray Current
The electrical systems on boats have improved sufficiently over the last 20 years that stray current corrosion is much less of a problem. It begins to show up in older boats because of all the jury rigged wiring and systems that get added on over the years. In newer boats, it usually occurs due to ground wiring faults on the dock.

The basic mechanism of stray current corrosion is the same as all other types, only this time the introduction of an outside source of electricity screws up the normal electrical balance of the boats metals, plus adding one other pernicious problem. Energizing all the underwater metals in the boat, that raised electrical potential will seek a path to ground. And rest assured that it will find one. That path will be the piece or pieces of metal below the water line that are the weakest like. It will start with the zincs and once those are destroyed, it will move onto the next lest noble metal. That's usually a poor quality alloy of prop shaft, propeller or through hull fitting. In other words, it's likely to attack one specific piece of metal. As the current leaves the piece of metal on its way to ground, it is carrying bits of the metal with it, as well as the erosion that may occur from part to part.

It is the most difficult corrosion problem of all to identify and correct because the source could anywhere amongst that mass of wiring in your boat. The first thing that must be done is to meter out the dock circuit to make sure that it isn't feed-back from the dock grounding system (i.e. the grounding system is positively charged, which can feed back into your boat), or that the grounding wires are not reversed.

The conditions created by AC and DC current is not the same, with DC current being the most damaging. The reason for this is that AC current is pulse current that moves in two directions, greatly reducing the corrosion potential. Technically, AC current requires some kind of diode that converts it into DC current before it causes metallic corrosion. There are lots of naturally occurring diodes in crystalline forms of metallic oxides. Aluminum oxide is very good at converting AC to DC   current. The aluminum oxides that form inside aluminum boats.

Yet AC current may be just as damaging because the voltage is so much higher. If you ever wondered why there is so much misinformation concerning AC current corrosion, this is why. Unless the right conditions exist to covert the AC to DC current, the corrosion does not occur. Thus, only some boats on a dock with faulty AC wiring suffer damage, while others don't. These are almost always older boats where corrosion is already present, as it is the crystalline nature of metallic oxides that exacerbates the rate of corrosion.

AC current corrosion occurs much less frequently, mainly due to the fact that the high voltage is dangerous, and it is treated with more respect. Moreover, if there is a 125 volt leak, the chances are that it's going to be found rather quickly as the boat owner doesn't appreciate the shocks he gets occasionally. Amongst the thousands of boats, the number that have been founded with AC ground faults is amazingly few.

DC Current
It leaks are the most common form of stray current problem. The fact is that any boat that utilizes high quality underwater metals and has a good bonding system can tolerate a fairly high amount of stray current leakage. This is because the low voltage current rather quickly dissipates throughout the system. Like trying to wash your car with a cup of water, there isn't enough to go around to do the job. The small amount that finds its way to underwater metals is usually taken care of by the zincs, or dissipated by a large amount of metal.

Substandard bilge pump wiring is the most common  source of stray current. So are batteries mounted in a wet environment, such as sitting on a wet deck. Take a fully charged battery and sit it on the floor of your garage. Come back a month later and measure the voltage. You will find that it is dead and the power has gone. Well, right out through the casing and into the damp concrete, that's where. Put that battery up on dry wood blocks and this won't happen. The same thing happens when you have wiring laying in a wet bilge. Plastic, you see, is not an absolute isolator. Just as your fiberglass hull will absorb water, battery casings and wiring insulation will absorb some water too, just enough to leak out a small amount of current. And cause you a lot of problems.

From
A Boatman's Primer on the Essentials
by David Pascoe, Marine Surveyor