late 14c., "possible" (as opposed to actual), "capable of being or becoming," from Old French potenciel and directly from Medieval Latin potentialis "potential," from Latin potentia "power, might, force;" figuratively "political power, authority, influence," from potens "powerful," from potis "powerful, able, capable; possible;" of persons, "better, preferable; chief, principal; strongest, foremost," from PIE root *poti- "powerful; lord."
The noun, meaning "that which is possible, anything that may be" is attested by 1817 (Coleridge), from the adjective. Middle English had potencies (plural) "a caustic medicine" (early 15c.).