Definition of Cryptocurrency A cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. It is secured by encryption technologies and functions as both a currency and a virtual accounting system, monitored and organized by a decentralized peer-to-peer network called a blockchain, which serves as a secure ledger of transactions. Cryptocurrencies are created and secured through cryptographic algorithms maintained and confirmed in a process called mining, where miners process and validate transactions and are incentivized with the cryptocurrency.