How exchanger works?

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1

Hello

I have a question that confuses me, about the exchanger website, how it works?

if you have BTC or ETH and want to convert them to fiat to Paypal for example, how this works?
1- user put BTC or ETH and the exchange site will take them and give funds instead from the owner of that website?
2- user put BTC or ETH and the site convert codes from crypto to Fiat via a process that allows you to send them to PayPal?
3- there is a blockchain API that allows this process, the user puts BTC or ETH blockchain API takes them, and gives user funds?

4- reason out or my mind only professionals know-how!

who has the correct right clear answer, pls let me know.

regards

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2

Hi,

If you are referring to a centralized exchange, I assume they hold crypto and fiat and allow you to exchange either (within limits) and they keep track of balances in their database.