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Bitcoin operates on a peer-to-peer network, with no central authority or financial system ¹. Here's a simplified overview of how it works ² ³:

- The blockchain is a shared public ledger that records all Bitcoin transactions.

- A transaction is a transfer of value between Bitcoin wallets that gets included in the blockchain.

- Mining is a distributed consensus system that confirms pending transactions by including them in the blockchain.

- The Lightning Network is a layer-2 solution that enables faster and cheaper transactions by creating payment channels between users.

- Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions and prove ownership.

- Transactions are broadcast to the network and verified by nodes through a process called mining.

- Mining creates a competitive lottery that prevents any individual from easily adding new blocks consecutively to the blockchain.