Using the upload image option in the rich content (RCE) editor is the recommended approach to add images in Canvas. 

Never paste an image into the rich content editor. The image may appear while you are editing, however upon saving the page or submitting your quiz the pasted image will not be saved or uploaded to Canvas servers.

With Canvas open please follow the below steps.

1. Open the rich content editor (RCE), this can be opened as part of a discussion, assignment, quiz or announcement.

2. Click the image icon in the menu bar 

3. Drag and drop the image into the upload image box or double click to browse computer and upload

4. Click submit

5. The image has now been inserted correctly and will appear when viewing the discussion, assignment, quiz or announcement.