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How Cryptocurrency Works - NYTCryptocurrency (or �crypto�) is a digital currency, such as Bitcoin, that is used as an alternative payment method or speculative investment. A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means. How Does Cryptocurrency Work? A cryptocurrency is a digital, encrypted, and decentralized medium of exchange. Unlike the U.S. Dollar or the Euro.