From LQWiki
A cracker is anyone who tries to break into computer systems using any means at his/her disposal, including keystroke loggers, bootable media, scripts, root kits, known vulnerabilities, social engineering etc. etc. with malicious intent. This term is often confused with hacker. A hacker creates things, a cracker destroys them. See also Black hat hacker.
Contrary to widespread myth, cracking does not usually involve some mysterious leap of hackerly brilliance, but rather persistence and the dogged repetition of a handful of fairly well-known tricks that exploit common weaknesses in the security of target systems. Accordingly, most crackers are incompetent as hackers. This entry used to say 'mediocre', but the spread of rootkits and other automated cracking has depressed the average level of skill among crackers.
The term "cracker" was coined ca. 1985 by hackers in defense against journalistic misuse of hacker. An earlier attempt to establish worm in this sense around 1981-82 on Usenet was largely a failure.
Use of both these neologisms reflects a strong revulsion against the theft and vandalism perpetrated by cracking rings. The neologism “cracker” in this sense may have been influenced not so much by the term “safe-cracker” as by the non-jargon term “cracker”, which in Middle English meant an obnoxious person (e.g., “What cracker is this same that deafs our ears / With this abundance of superfluous breath?” — Shakespeare's King John, Act II, Scene I) and in modern colloquial American English survives as a barely gentler synonym for “white trash”.
While it is expected that any real hacker will have done some playful cracking and knows many of the basic techniques, anyone past larval stage is expected to have outgrown the desire to do so except for immediate, benign, practical reasons (for example, if it's necessary to get around some security in order to get some work done).
Thus, there is far less overlap between hackerdom and crackerdom than the mundane reader misled by sensationalistic journalism might expect. Crackers tend to gather in small, tight-knit, very secretive groups that have little overlap with the huge, open poly-culture of the true hackers; though crackers often like to describe themselves as hackers, most true hackers consider them a separate and lower form of life. An easy way for outsiders to spot the difference is that crackers use grandiose screen names that conceal their identities. Hackers never do this; they only rarely use noms de guerre at all, and when they do it is for display rather than concealment.
Ethical considerations aside, hackers figure that anyone who can't imagine a more interesting way to play with their computers than breaking into someone else's has to be pretty losing.
See also
This article is based, in whole or in part, on entry or entries in the Jargon File.

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