The Royal Mint has paired up with the markets operator CME Group to build a gold market using nascent blockchain technology, in a bid to broaden London’s appeal as a place to buy and sell bullion.

The state-owned Royal Mint hopes to start accepting trades from the middle of next year on its Royal Mint Gold platform, which will log each transaction using blockchain, a transparent and so-far tamper-proof method of keeping records.

The market will be underpinned by up to $1bn in gold bars, or around two tonnes at current prices, which will be stored in the Mint’s vaults near Cardiff.

Blockchain is best known as the open technology that was used to build Bitcoin, the online payment system that can be used anonymously.

CME and the Royal Mint have spent about a year trying to adapt the technology to use in the gold market, where the methods of physically buying and selling the commodity have remained largely unchanged for hundreds of years.

“We were looking for a solution that was efficient in handling trading. We didn’t set out with blockchain in mind but we wanted to address the problem that it costs money to vault gold. This is a digital solution to physical gold trading,” said David Janczewski, director of new business at the Royal Mint.