If you just want to turn the circle into white or make it transparent then you are not searching for the channels and color replacement might be the wrong tool.
I dont know how much experience with Photoshop you have, thats why I link articles here to give you the opportunity to learn about the basics before fiddling with it. Photoshop in its core really is a very simple program and it makes fun to learn and use it.
Turning the circle transparent
Just select everything except the outer circle and press on "create mask".
The mask will be generated with black spots for the circle and white spots for the devil. The circle will be made transparent because of the mask.
You can edit that that mask by clicking on it and then just drawing with a brush or similar on it. You will not see the black/white pattern when you just select the mask but you will be able to see your image which makes it really easy for you just to draw with black on everything you dont want to see and draw with white on everything you want to see.
Alternatively to the mask-method you could select nothing except the circle you want to remove and then just press
Backspace on your keyboard. The selected parts will will be removed and thus are no longer visible.
I recommend the approach with the mask, because it's non-destructive and thus you are later able to restore or alternste the original image as well as the mask.
Turnung the circle white
Create a fill color with the color white and create a mask for the fill color. Same principle here as in the transparent section: Black color on the mask hides the layer, white color makes it visible.
You want to select the outer cirlce you want to dye white and then you make everything on the color fill mask white while keeping the other parts black.
This will create a fully white circle which perfectly fits onto your previously blue curcle and thus hides it. Please note that the fill color with the masks needs to be above the devil layer to be visible.
You also could create a new layer and just fill the parts you need white with white without using a mask. This will have the same result but when using a mask it gets really easy to change to color of the overlay later.
I recommend you to do both of the things I just explained to you so you can learn them and see how they affect the image and what you might need to do to keep image quality.
Sorry that I'm not able of putting puctures in here. I'm currently online from my phone.
I hope I was able to help you.
Have a nice day
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