The dominant story this week is all about how security is extremely important in the Bitcoin world–not to mention the Internet in general–when money is digital, it makes sense to keep it safe. Extremely popular wallet service and blockchain explorer Blockchain.info recently experienced a security issue that lasted a mere two and a half hours. In that time people did lose some bitcoins, keep reading for an explanation.

BitPay has landed another money processing service with Xsolla, a developer-centric monetization service who could benefit greatly from actual microtransactions. Minecraft is once again in the Bitcoin limelight with the BitQuest server, which hopes to integrate Bitcoin as a distributed currency and economic system in game.

After winning the entire lot of bitcoins from the Silk Road seizure, venture capitalist Tim Draper has come back to the US Marshal’s auction and won 2,000 BTC. New York State says buying bitcoins should not incur sales tax. And, check out a new bitcoin merchant site OneWallet.io.

All this and more in this Bitcoin Weekly!

Blockchain.info security disclosure

Monday evening, December 8, between 12:00am and 2:30am GMT Blockchain.info had a security issue that affected the way that private keys for user wallets. In a transparency report blog post, the company said issue was caught quickly and affected only 0.0002% of the user base.

Users affected with e-mail addresses on file were informed immediately, but if you made a wallet between those times you should contact Blockchain.info:

“If you created a wallet, generated a new address via Blockchain.info’s web-wallet, or sent bitcoin from your wallet during this time period and have not provided us with your email address, please contact our support desk at support@blockchain.zendesk.com or simply create a new wallet.”

Addresses, wallets and transactions executed via Blockchain.info mobile apps on iOS and Android or the Chrome extension were not affected, the company added.

Read more about this at Blockchain.info’s transparency post on the subject.

Since the disclosure of this security issue, Reddit has seen a few threads from users claiming their coins were stolen: “VICTIM: 100 Bitcoins STOLEN from blockchain.info Wallet during the Security Leak” and “ALL MY FUCKING BITCOINS GONE FROM BLOCKCHAIN”. The Blockchain.info Reddit user, /u/blockchainwallet, has been busy keeping up with them and responding about the investigation.

The general reaction from the community as to this breach has been mixed. Blockchain.info has been quick, transparent, and very visible about what happened and who it affected. The company has also gone to the community (mostly on Reddit) to engage customers who had issues directly.

BitPay integrates with Xsolla

BitPay has announced an integration with Xsolla, a billing platform designed so that developers can monetize and improve conversion on apps. This integration with BitPay means that developers who implement Xsolla for in-game transactions will be able to exchange with bitcoins.

“Xsolla is designed to seamlessly integrate payments into the gaming process,” says Oleg Poskotin, VP of Finance at Xsolla. “Our partnership with BitPay enables us to bring bitcoin payments to game developers, extending their purchasing freedom.”

Calling out gaming developers as a strong audience for bitcoins, Xsolla calls out BigPoint Games, which implemented BitPay last year, and Twitch, which also accepts bitcoins for subscriptions.

BitQuest: A Bitcoin economy in Minecraft

A new Minecraft server called BitQuest just started a beta that hopes to integrate Bitcoin as a distributed cryptocurrency for in game activity. The server developers hope to use Bitcoin to provide a robust in-game economy as well as attract interested users.

According to an excellent profile in CoinDesk, the server runs a great deal like any other Minecraft server with a built-in economy, and although it uses Bitcoin, users cannot deposit bitcoins (or in this case bits) into the game, only earn them through in-game participation. BitQuest’s lead developer, Cristián Gonzáles, explains that this is to reverse the industry standard of having players buy-in to the game economy with money and get locked in.

Players who want to cash out their accrued bits will need to use a Xapo wallet to do so. BitQuest uses an integration with the Xapo API to transact in bitcoins.

As a distributed monetary system that can represent extremely small transactions, Bitcoin may have the potential for being a stand-in for gaming microtransactions (the holy grail of gaming monetization for impulse purchase) but so far the industry and the technology has resisted this use.

While the bold experiment of BitQuest could provide a proof-of-concept for using bitcoins in Minecraft it does following the wake of such now-defunct projects as BitVegas, a Minecraft server that provided gambling and minigames used to earn bitcoins.

Tim Draper wins 2,000 BTC in second US Marshal’s Silk Road bitcoin auction

After winning the entire lot of the last US Marshal’s seized assets auction of Silk Road bitcoins, venture capitalist Tim Draper has gone on to win a lot of the newest auction as well. In July, Draper won roughly 30,000 BTC. In this round, Draper won a block of 2,000 BTC–(approximately worth $705,040 at today’s exchange rate–but has not disclosed how much he paid for them.

For more details about the US Marshal’s action read about the winners in Mellisa Tolentino’s SiliconANGLE coverage.

New York State tax agency says bitcoins not subject to sales tax

In a surprise bit of regulation, noting the presence of the “BitLicense” proposal, the New York State Department of Taxation and Finance recently said that bitcoin purchases are not subject to sales tax in some situations.

CoinDesk reports that as bitcoins themselves are considered “intangible property” this exempts bitcoins themselves from sales tax when purchased. However, when bitcoins are used as a currency to purchase other taxable goods and services they become a barter currency and therefore that transaction is subject to sales taxes.

Check out this bitcoin marketplace named OneWallet.io

Opening just in time for holiday shopping, OneWallet.io has over 600 products already available for purchase with bitcoins. Bitcoin Magazine wrote a long profile of this site including a number of details about the creation of the company and Lee Marburg, founder of OneWallet.

The website is clean and straightforward, offering up information on OneWallet as well as featured merchants and an explanation of why the site uses bitcoin.

“By using Bitcoin as the medium, we are significantly lowering the cost of trading internationally,” said Marburg. In many ways OneWallet is an ecommerce site that acts as a marketplace for 3rd party sellers to list their products for customers to come and purchase with bitcoin. It is free to list goods for sale and only a 2% fee is payable if the product successfully sells.

OneWallet’s interface looks and acts very similarly to many e-commerce sites on the Internet. And the selection of goods for sale is large enough that it includes the Samsung Galaxy 5S, which has become Bitcoin Weekly’s go-to search for bitcoin sold electronics. At $500 the smartphone is currently being listed at 1.40594 BTC with the dollar value and BTC value side-by-side for easy reading.