Grothendieck group
Whole numbers let you add, but you cannot always subtract and stay inside them — until you invent negative numbers and build the integers Z. The Grothendieck group does exactly this trick for any system where you can add but not subtract: it is the smallest group you can build from a commutative monoid by formally throwing in inverses. Just as Z is forced into existence by the demand “I want to subtract”, the Grothendieck group is the universal answer to that same demand applied to things like isomorphism classes of modules, vector bundles, or any objects you can take direct sums of.
Precisely, let M be a commutative monoid written additively. The Grothendieck group K(M) is the abelian group with a monoid homomorphism M -> K(M) that is universal: any monoid homomorphism from M to an abelian group factors uniquely through it. One constructs K(M) as pairs (a, b) thought of as “a minus b”, modulo the relation (a, b) ~ (a', b') whenever a + b' + c = a' + b + c for some c (the extra c handles non-cancellative monoids). When M already cancels, the simpler rule a + b' = a' + b suffices.
The construction is a left adjoint to the forgetful functor from abelian groups to commutative monoids, which is the abstract reason it is universal. A subtlety worth respecting: the natural map M -> K(M) need not be injective. If M fails to be cancellative — say a + x = b + x but a is not b — then a and b collapse together in K(M), so passing to the Grothendieck group can lose information. This is exactly the phenomenon that stably free modules exploit.
The Grothendieck group of the monoid (N, +) of natural numbers under addition is Z: every difference of natural numbers becomes an integer. More generally the Grothendieck group of the multiplicative monoid of nonzero elements of an integral domain is its field of fractions' multiplicative group.
The integers Z are the Grothendieck group of (N, +).
The name honors Grothendieck, who introduced K(M) in his 1957 work on the Riemann-Roch theorem, taking M to be the monoid of coherent sheaves under direct sum. The letter K stands for the German Klasse (class). Every later K-group is, in spirit, a Grothendieck group of some category of objects with a chosen notion of short exact sequence.