What an exchange means to fiat and cryptos respectively.

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Fiat money also known as commodity money which enjoys value because a certain government pronounced it Legal Tender. While conventionally cryptocurrency is a data processing machine assets otherwise known as digital assets, and this allows for direct transaction amid persons without emissary.

In it's functionality, Cryptocurrency unlike Fiat money can be spent/received anywhere throughout the world without the requisite for a bank. Fiat money value is dominating through debt which is not the case for with Cryptocurrency (Bitcoin).
In similarity, order for both to function as a means of exchange a boundless consumer trust is needed, and as a store of exchange value both can be use for payments. But while Cryptocurrency's (Bitcoin) production and distribution is through the mining process, Fiat money is controlled by the the government through it central bank and there's far much trust on Bitcoin when compared to Fiat money due to it's enhanced tamper-technology-security.

Pushing further, when it comes to Fiat_to_crypto exchange, for an initial purchase of Cryptocurrency one would have to make use of the local means of payment which is credit card , bank note or debit card etc.

How crypto exchange operates:
Delving onto how the Cryptocurrency operates for a newbie trying to have a clear understanding of what the Cryptocurrency exchange is all about, as a beginner you need to have an understanding of how bitcoins and other coins work, especially the blockchain process and the role it plays.
Also need to understand why majority today chose the Cryptocurrency over Fiat money. Looking at how Cryptocurrency operates, an individual with the pleasure of owning this digital asset has to be very careful about the security from where or the source he is buying it and also the price in view of the many purposes that crypto exchanges comes with.
Going further, I come to understand that through Cryptocurrency exchange one can convert his funds into Bitcoin on different exchanges in order to arrive at the coin of the person's choice or desire. The crypto exchange can also be used by firms or individuals converting Fiat currencies irrespective of the country's currency into Cryptocurrencies thereby closing the gap between two or more economies.
It also afford traders that are into the business of buying and selling to quickly locate another trader that's interested in buying or selling their asset in the market, but in the case of of liquidity delay is most likely to occur which may either lead to a low or high cost due to the level of risk involved, Etc.

N/B: Not to forget, when it comes to crypto exchange, security should be your major concern

[Markinzo]

In as much as security is sacrosanct in the system, it should also be profit based, in that the two should go in line, cause the main reason of investment is profit making.