A centralized exchange is a company-run platform where you can buy, sell, and trade cryptocurrencies. You create an account with your real identity, deposit money, and the exchange holds your funds while you trade. Examples include Coinbase, Kraken, and Binance. Centralized exchanges are convenient but require you to trust the company with your money.
You create an account on a centralized exchange, provide your identification, and transfer $1,000 from your bank account. The exchange holds your $1,000 and allows you to buy Bitcoin or other cryptocurrencies. When you want to sell, the exchange converts your cryptocurrency back to dollars and returns the money to your bank account.
Greater Fool is a free Chrome extension that explains terms like this in place. Highlight a word on any page, click Explain, keep reading.
Add to Chrome (free)