I would be a little leery about using the old paperclip trick, too. :-) However, I would assume that it works just like a simple immersion heater that you can use to boil a cup of water for boulion, coffee, tea, etc.
Water with minerals in it, such as salt, conducts electricity (distilled water doesn't conduct electricity). When you immerse the two paperclips, electricity flows from one to the other, thus heating the water in between them. He must be using a small bucket, because it seems like it might take about a hundred years to bring 5 gallons of water, to a boil. :-)
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