Not only is this question one of the ones I get most frequently, I'm pretty sure it's the very first question a reader ever sent me, not long after this site went live back in early 2008.
In one form or another, it boils down to this:
"MUST one refrigerate one's butter, causing it to harden into an unyielding yellow brick, wholly unspreadable, good only for ripping one's toast or pancakes or muffins to shreds? Or may civilized folk instead leave it fondly on the counter, so that it remains soft, smooth, oh-so-spreadable, and altogether lovely?"
That the question needs to be asked at all is slightly discouraging, particularly considering the progress human beings have made in so many other areas: eradicating polio, landing astronauts on the moon, developing the periodic table and so on.
And I've certainly learned over the years to take the world as it is, not as it should be. Still, I feel it's my solemn culinary duty to do what I can to help banish, once and for all, the brutal and unnecessary practice of refrigerating butter. If I accomplish nothing else as a food writer, I'll consider it a worthy achievement.
So the short answer is: PLEASE DO NOT REFRIGERATE YOUR BUTTER.
Seriously. It makes the butter cry, and it makes me cry.
Can Room-Temperature Butter Make You Sick?
At the root of the question seems to be a concern about food safety, and it's worth addressing.
The bacteria that cause food poisoning require (among other things) a relatively protein-rich environment in order to multiply, which is why you can leave an onion out on the counter overnight but not a steak.
And butter is mostly fat. It contains a small amount of water (16–17 percent), and a very small amount of protein, somewhere in the range of 3–4 percent. Not enough to promote significant bacteria growth. This is especially the case with salted butter, since salt inhibits the growth of bacteria.
Salted butter will keep for weeks at room temperature. But realistically, if you don't go through at least a stick of butter per week, you're 1) not cooking right, and 2) probably not reading this article because you don't care about butter.
Further up the spectrum is clarified butter (sometimes referred to as ghee). Clarified butter is pure butterfat, without the water and milk solids, which means it has a very long shelf life. You could keep clarified butter at room temperature for several months.
Spoiled Butter Vs. Rancid Butter
A much bigger concern with butter is that the fat can oxidize and become rancid. It should be pointed out that rancid butter can't make you sick, but it won't taste or smell very good.
Rancidity is caused by exposure to oxygen, light and heat.
So, to prevent rancidity, keep your butter in an opaque butter dish with a lid. Opaque meaning you can't see through it. I keep my butter in a white butter dish like this one. Don't get a clear one, because light is one of the things that can cause butter to become rancid.
Indeed, I keep my butter in the wrapper in the butter dish. This is as much out of laziness as anything, but keeping it wrapped does leave less surface area that can come into contact with oxygen. It may or may not also make the butter dish easier to wash.
Also please note that what I'm recommending is leaving one stick of butter at a time in a butter dish on the counter. Not the whole pound of butter. Leave the rest in the fridge, obviously. I'm not crazy.
Additional Considerations, Tips and Conclusions
As a matter of fact, certain kinds of baking (like making flaky pie crust or puff pastry) require cold butter. So depending on what goes on in your kitchen, you're going to want to keep some butter in the fridge. All I'm talking about leaving on the counter is the butter that goes on your toast in the morning.
Which is also why I don't advocate letting your butter sit out all day, returning it to the fridge at night and then taking it back out again first thing in the morning. Because when are you most likely to eat toast? The morning. Therefore, when would this system tend to be the least helpful? Exactly.
(If you happen to have one of those wine refrigerators, that chills your wine to like 55°F, you could keep your butter in there overnight, especially during the summer months. But I feel like if you have one of those wine refrigerators, your life is already pretty perfect and I kind of don't mind if your toast gets wrecked in the morning.)
Oh, and you'll thank me for this: If some well-meaning knave should happen to put your butter in the fridge without your knowledge, and you learn of their foul deed only after your bread is already in the toaster, well, fear not! You can grate your rock-hard butter on a cheese grater, and the little butter gratings will spread much more easily.
By the way, the cheese grater trick is also a great technique for cutting butter into flour.
Finally, if you keep your butter near the stove, or near the toaster, or if it stays above, say, 80°F in your kitchen, your mileage is going to vary. But again, the only real issue is rancidity, not bacterial spoilage. Other than via direct cross-contamination, there's really no plausible way for butter to make you sick.
Which means, if you've been keeping your butter in the fridge because you're concerned about food poisoning, your life just got a whole lot easier.