Ransomware is a kind of malware that gets installed on your computer mostly by a mail attachment or less likely by using the browser. Ransomware encrypts part of your data. By paying a ransom you get a piece of software, which decrypts the data again. Another name of this malware is cryptoware or cryptoworm.
Ransom has to be payed in crypto currency. This makes it more difficult to track the recipient of the money.
The advice is not to pay the ransom. Even if you pay, you often do not get your data back.