Candy is a consumable resource that can be used to power up and evolve your Pokémon. Candy is acquired by capturing Pokémon (3 for first stage evolution, 5 for second stage evolution, 10 for last stage evolution), or by hatching eggs (various amounts). The type of candy the player receives is specific to the Pokémon, i.e., capturing or hatching a Pikachu will give you Pikachu candy. Transferring your duplicate Pokémon to Professor Willow will also give you Pokémon-specific candy (one per transfer), so if you're looking to evolve one, make sure to capture lots of duplicates.
Each evolutionary line has its own candy type. There are currently 78 different types of candy. Each one represents the base form and is identified by its primary and secondary colors.