Chakra

Essential to even the most basic jutsu, chakra is mixture of the energy present in every cell of the body and the spiritual energy gained from exercise and experience. Once mixed, it can be channeled through the chakra circulatory system, which is to chakra as the regular circulatory system is to blood, to any of the 361 chakra points (called tenketsu) in the body. Through various methods, the most common of which is hand seals, the chakra can then be manipulated to create an effect that would not be possible otherwise, such as walking on water.

By mixing different ratios of the two energies, new type of chakra can be formed. The most common product is elemental chakra, which is use to perform elemental jutsus. Most ninja have a natural affinity to one type of chakra, but they have the capacity to create elemental chakra apart from their own affinity. There are six basic elements, each stronger and weaker to another. However, only 5 have been shown so far. In addition to these six elements, certain kekkei genkai can mix elemental chakra to form new elements, such as ice (wind and water) and wood (earth and water). While many ninjas can use more than one type of chakra, they cannot use them simultaneously (with few exceptions).

Normal Chakra
This blue chakra (yellow in the manga) is known as the normal chakra that all ninja naturally produce no matter what. Normal chakra is not visible to the eyes when it is use to perform jutsu. This chakra is supposed to circulate inside the human body but can sometimes surface outside the body. The only situation where chakra is visible is when a person is really mad or wants to increase all or as much chakra as possible, though this is rarely seen. In order to harness this chakra, Hand Seals are performed. This allows the user to expel it out of the body in the form of an attack, and requires different Hand Seals for different attacks. With these seals, users can practically double their "Chakra-like energy" in what feels like 5 minutes. But in Naruto, chakra takes time and lots of training to gradually build up. So what's really the key is not actually having chakra, but being able to sufficiently control it. Because, everyone has chakra, but only skilled ninja can correctly manipulate it to it's fullest extent. As an in-between stage here, some ninja, can partially control their chakra. This means they can use their chakra, but not effectively control it, which results in poorly executed justus, and more importantly, running out of chakra early in a fight.Out of the many different types of jutsus: Ninjutsu, Genjutsu, Doujutsu, and so on, all require the use of chakra. However, Taijutsu is different. It basically requires no chakra use whatsoever. The ninja still needs Chakra to live, Taijutsu just doesn't use it (with few exceptions). A standard attack like a punch or kick falls into this jutsu category.

Since chakra is the resulting form of energy when 2 other energies are mixed together, having those other 2 energies become more powerful, will in-turn make the chakra more powerful. These other two energies are physical energy, which is collected from the body's cells, and spiritual energy, which is built up through experience and meditation.

Therefore, practicing a jutsu repeatedly will build up experience, thus giving more spiritual energy, and then allowing more chakra to be created. Which as a result then allows a ninja to do that same attack with more and more power. This same cycle applies for Physical energy, except this time, instead of doing things like meditation, the ninja could, say, do push-ups. Molding chakra means to extract energies from both the body and the spirit, then mixing them up in the body. And the amount of each energy will differ from the type of technique the ninja wishes to execute. In other words, the mixing will be different, and the chakra canot be used effectively. Even if a ninja is able to mold a large amount of chakra, the technique will only be half as effective or not executed at all, even if the user has vast amounts of chakra. Wasting energy will create a weakness of not being able to fight for a long time.

Elemental Chakra
Based on which jutsu the ninja uses, the type and amount of chakra will be different as would the elements you would be to employ. The five main elemental styles are also the names for the Five Great Shinobi Nations: Fire, Wind, Lightning, Earth and Water. Each ninja has the potential to better utilize one of these styles and potentially more. A sixth element has been mentioned but has not been exposed. A special elemental detecting paper is used to determine ones type. When the ninja imbues the paper with a portion of their chakra, the paper will alter to reveal one's type. Fire = burn, water = wet, earth = turn to dust, lightning = crumple, wind = cut in half.

The strengths and weaknesses of chakra are as follows: Fire is stronger than Wind, Wind is stronger than Lightning, Lightning is stronger than Earth, Earth is stronger than Water, and Water is stronger than Fire. Chakra types such as wood and ice are the result of combining different elemental chakra types, such as the Kekkei Genkais Mokuton, of the First Hokage, and the Hyoton, of Haku.

According to many people, wind elemental chakra is the rarest and "most dangerous/powerful"

Also, many people have made a reference to "Light and Dark aka Yin/Yang chakra". Apparently, this is the sixth elemental type but it has not been confirmed. The only thing that has been confirmed is that this dual-singular element is very powerful and unstable.

Eight Gates Chakra
By breaking all of the body's limits on how much strength can be used, a Ninja can access 100% of their total power. These restrictions are known as Gates, 8 gates in all. One's own muscles and Chakra are so powerful that using them to their full capacity will destroy them, literally making the muscles explode or rip into pieces. This Chakra can only be used temporarily, and kills the user after about 5 minutes if all gates have been unlocked. The fewer gates unlocked, the longer the user has until the attack kills them. Because this attack is so dangerous it is classified as kinjutsu. This technique will cause some of the Chakra emitting from the user to turn green, although it is still normal chakra; the color change possibly being due to the large amount being utilized when performing the technique.

Cursed Seals
Orochimaru gives all of his subcordinates a cursed seal to increase their power in exchange for their free will. To do this, Orochimaru first bites the target on the neck, leaving a seal composed of three identical marks arranged in a circular pattern. The target then loses consciousness. If the target survives, he/she would wake up with a level 1 cursed state. The curse seal works by forcibly drawing chakra from the body, giving them more chakra.

The seals differ from user to user. When inactive, the cursed seal is just like a small tattoo. Once active to level 1, the tattoo spreads to their whole body. On level 2, the seal covers the whole body, giving demon-like alteration to the user, including yellow animalistic eyes. The curse seal slowly eats away the user's personality, like tailed beasts' chakra to their host.

Orochimaru developed the cursed seals through experimentation on a prisoner named Jugo, whose body naturally produces an enzyme that triggers a state on which the cursed seal is based. The difference between Orochimaru's seals and the unrefined enzyme are the effect they have: while the cursed seal is controllable, the unrefined enzyme produces uncontrollable rage in those exposed to it, including Jugo himself, and the effects cannot be controlled.

Demon Chakra
In the Naruto world there exist 9 Tailed Beasts which are ancient spirits with immense chakra. The amount of chakra each beast has corresponds with the number of tails it contains. During the Great Shinobi Wars, each country's Hidden Village tried to make use of the Tailed Beasts for military purposes and competed for them. However, no one was ever able to truly bring the Tailed Beasts under control. The only way to partially control them is to seal them within a human with a powerful sealing technique. The hosts of the Tailed Beasts are called Jinchūriki. A Jinchūriki can tap into the Tailed Beast's chakra for his or her own power. However, using such chakra can be harmful to the Jinchūriki, with the host's body and mind being influenced or even taken over by the beast. In the case of Naruto Uzumaki, when he uses the Nine-Tailed Demon Fox's chakra and reaches his four-tailed transformation, the chakra is so concentrated around his body that it constantly burns and repairs his skin right away, shortening his lifespan. But tapping in to such unnatural chakra is very harmful to the host, as the host's personality gets suppressed by the animalistic bloodlust of the Tailed Beasts and the intensity of chakra will harm the host if used for extended period of time.