Here, we shall be brief as we could so that everyone who wishes to undertake this task can follow along and get it done with ease.
To use a regular money to buy Bitcoin, once you have a Bitcoin wallet, you can then use a traditional payment method such as credit card, bank transfer (ACH), or debit card to buy Bitcoins on a Bitcoin exchange (example: Coinbase). The Bitcoins are then transferred to your wallet.
The availability of the above payment methods is subject to the area of jurisdiction and exchange chosen. Here is a screenshot of the Bitcoin interface showing how to buy and sell not just Bitcoin but also Ethereum and Litecoin, which are other popular virtual currencies.
As you see, it’s as straightforward as clicking on the “Buy” tab if you want to buy, and “Sell” tab if you want to sell. You select which currency you are buying/selling and which payment method (your bank account or credit card) you want to use.
Remember that “Bitcoin exchange” and “Bitcoin wallet” need not be the same. Bitcoin exchanges are just like forex exchange places where you can trade Bitcoin for a fiat currency, say, BTC for USD and vice versa (in U.S. for example).
While exchanges offer wallet capabilities to users, it’s not their primary business. Since wallets need to be kept safe and secure, exchanges do not encourage storing of Bitcoins for higher amounts or long periods of time.
Hence, it is best to transfer your Bitcoins to a secure wallet. Security must be your top priority while opting for a Bitcoin wallet; always opt for the one with a multi-signature facility. There are many well-established exchanges that act as a one-stop solution by offering high-security standards and reporting. Due diligence must be exercised while choosing a Bitcoin exchange or wallet.
Thus, it’s the “private key” that is kept in a Bitcoin wallet. Some safeguards for a Bitcoin wallet include: encrypting the wallet with a strong password and choosing the cold storage option, i.e. storing it offline. In the case of Coinbase, they offer a secure “multisig vault” to host your keys, which you can sign up for.