In the context of cryptography, the un-transformed message is known as plaintext, the transformation is known as encryption and the transformed message is known as ciphertext. The encryption process requires either a cipher or an algorithm. The process to reverse the transformation is also known as decryption.
A cipher is any method that is used to encrypt text. It encompasses the use of rearranging the text in a consistent pattern, or the use of an algorithmic pattern (or formula) of rearrangement. Simple ciphers include the substituting letters for numbers or vice versa, the rotation of letters - a lot like what Caesar did in his time.
The inclusion of an algorithmic process makes things more complicated, ensuring a harder time for anyone that might want to try breaking the cipher.
In cryptography, a variable value (known as a key) is also further applied to an algorithm to secure it - the length of the key is directly proportional to the complexity in decrypting the message.
So there are two variables - the algorithm and the key that is added. The two-variable system makes it tougher to break, as well as easier to implement.
In practice, the algorithm tends to be standardized (more or less) and is openly known, since it's only a formula. It still needs the message to encrypt, and a key. Examples of algorithms for encryption would be DES (data encryption standard), the commercially available RSA algorithm, and the upcoming AES (advanced encryption standard).
The key is critical in the entire process. In a typical cipher, the key would allow parties to understand the contents of the message, encrypting and decrypting using the same pre-arranged variable. Because only a select group is meant to possess this key, the key is known as a private key.
Read more about PKI in Asia.