What is the difference between alcohol and liquor?

Alcohol is a substance found in alcoholic drinks, while liquor is a name for these drinks. So for example one might say "I'm drinking liquor, which contains alcohol."

Liquor is a beverage that contains alcohol. Not all alcoholic beverages are liquors though, beer, wine, malt beverages all contain alcohol but are not liquors. To be a liquor the beverage must be distilled from one of the fermented beverages mentioned above. Liquors have a much higher proof rating (200 proof is 100% alcohol, 40 proof is 20% alcohol, 1 proof is a 1/2 %) usually around 40 proof, although Bacardi 151 is famous for being 151 proof (75.5%) and some moonshines are higher even. Also not all alcohol is ethanol (the kind you can drink) isopropyl is a different alcohol (rubbing alcohol) and it is not potable!

The exact meaning of liquor has changed over time. Decades ago, liquor often referred to beer and wine in addition to distilled spirits. Hence, the term liquor is somewhat ambiguous.