The majority of these take place from an investor's home—usually on a desktop computer or a laptop—but online transactions can be made from any physical location. By definition, they're done on the Internet, and can be used to make purchases of goods or services, pay bills, and even donate to the charity of your choice.
Here's how an online transaction works: When you express interest in making a payment to a vendor, you're given access to their public key—that's the string of code that uniquely identifies them. The vendor's public key may not be obvious or visible to you—often it's embedded in the code of a “Pay Now” or “Donate Here” button—but trust us, it's there. No transactions can be made with digital currency without the public keys of both parties involved. You'll then transmit your public key, so the vendor knows who they're dealing with; it's basically the electronic equivalent of your saying, “Hey, take my money!” In turn, the vendor—who in all likelihood is more than happy to take your money—will use their private key to accept the transaction. Their account will be credited with the correct amount, and yours will be debited. If need be—for example, if you've purchased physical goods—they'll ask for your name and shipping address, since these aren't included in your public key. And that's all there is to it; you've made an online transaction.
An important note here about online transactions—and, really, all transactions made with digital currency: If you've purchased physical goods that need to be shipped to you, be 100% sure you've given them your name and address. Unlike credit cards, for example—where your physical address is linked to your account number—alternative currencies are anonymous, and that information isn't readily available to anyone who trades with you. Don't leave the vendor with your currency and no way to get your purchase to you. Some merchants may actually levy a surcharge for the added hassle if they have to track you down.
Next Merchants Topic: Brick-and-Mortar Store Transactions