Ah, that's a great question! When you sell your Bitcoin on an exchange, you are essentially selling it to other users who are buying Bitcoin from the same exchange. Likewise, when you purchase Bitcoin on an exchange, you are buying it from other users who are selling their Bitcoin on the same exchange.
Exchanges serve as middlemen between buyers and sellers, providing a platform for users to conduct trades with each other. They often charge fees for their services, which can vary depending on the exchange and the type of trade being conducted.
As for market orders, the explanation you provided is correct. When you place a market order, you are essentially agreeing to buy or sell at the current market price, which is determined by the exchange's order book. This means that you are buying from the lowest-priced sell orders or selling to the highest-priced buy orders on the exchange.
Market orders can be advantageous in situations where you need to execute a trade quickly, as they are typically filled immediately. However, they can also be subject to slippage, as you mentioned. It's always important to consider the potential risks and benefits of each type of trade order before making a decision.