It was really a silly mistake. It had occurred to me to check but I was in a hurry. I could have picked any number of words that begin with K (kaas, kunst, kaneel), but I chose kanaal and I screwed up. I am now here to fix my mistake. I have been corrected by a couple of people, one of whom is a friend who seems to know a lot about a lot of things (Alastair - There. I said it.) The other is a gentle reader (Hannah) who was ready to correct, but who saw that that job had been done.
Here is the correction.
A gracht is a man made waterway within the confines of a city or around a castle or stronghold (Fred's word). The plural is grachten. This is a photo of a gracht.
A kanaal is also man made but usually outside the confines of the city and connects natural waterways, like a river to a lake. The plural is kanalen. This is a photo of a kanaal. Specifically, it's the Schinkelkanaal.
Both gracthen and kanalen were originally used to transport goods, but these days (in my observation) grachten are mostly used for transporting tourists. Certain kanalen, like the Schinkelkanaal, regularly have big boats on them.
So to review:
Of course when you're in Amsterdam visiting and only speaking English, you'll always be correct to comment on the scenic canals. You might tell a friend to look away lest he see a drunken English person (never a Scot) throwing up in a canal. You might see where you need to be and say, "It's on the other side of the canal." You'll be right each time. It's only when you try to speak Dutch that you have to know the difference. But now you (possibly) have a little bit of trivia to bore someone with.
And please feel free to correct me if I'm wrong on any of this.