The umbilical cord naturally dies and falls off of a newborn baby relatively shortly after birth, within a few weeks. Similar to old dead skin flaking off your body.
So, what happens after birth but before it dies and falls away?
Generally it gets cut/snipped a couple inches away from the baby by the medical staff, then this extra umbilical cord still hanging on the baby is just wrapped around soemthing/tied in a knot to keep it from flopping around and getting in the way until it falls off.
For what decides if you have an innie or an outtie, this actually isn’t decided by anyone and has nothing to do with how the umbilical cord is handled, instead it is just a random chance that fluid builds up in the belly button, kind of like a ballon, creating an outtie
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