A bullet fired from a gun is an example of mechanical kinetic energy, while the gunpowder before firing is an example of chemical potential energy. Kinetic energy is the energy of a particle or wave in motion, while potential energy is the potential of this particle or wave to move.
Kinetic energy is possessed by any particle or wave moving relative to a certain reference frame. The faster a body is moving, the more kinetic energy it possesses. The energy of a body is directly proportional to the square of its velocity in each direction.
Potential energy is possessed by virtue of a body’s position or state. Potential energy is also relative, depending on what it is measured in reference to. Gravitational potential energy is directly proportional to the height of the body relative to a surface datum. Measuring the height of a ball relative to the ground level of a tall building gives one value of potential energy, while measuring the height of a ball relative to the top of this building gives another value. General conventions use positive values of gravitational potential energy for bodies above the datum surface and negative values for those below the datum surface.
Other forms of potential energy include the electrical potential stored in a battery and the mechanical potential stored in a spring.