In 2014, the government gave the Alan Turing Institute £10m to investigate digital currencies and distributed ledger technologies.

Speaking at a brainstorming event on blockchain in government yesterday, Cabinet Office minister Matt Hancock said that officials believe blockchain would be well suited to monitoring grant distribution.

He said: “Monitoring and controlling the use of grants is incredibly complex.

“A blockchain, accessible to all the parties involved, might be a better way of solving that problem.”

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Hancock said that the Bitcoin cryptocurrency had proved that distributed ledgers could be used to track currency as it passes from entity to entity.

He said: “Think about the Student Loans Company tracking money all the way from Treasury to a student’s bank account.

“Or the Department for International Development tracking money all the way to the aid organisation spending the money in country.”

However, Hancock said that blockchain technology was unlikely to work in every context within government.

He warned: “When a trusted body already exists, for example, that can hold canonical data, that’s often the best solution.

“But the fact that data held in the blockchain comes with its own history, and that history is a fundamental part of proving its integrity, this fact is enormously powerful.”

Yesterday’s event to brainstorm uses of blockchain within government was run by Digital Catapault and Imperial College’s Centre for Cryptocurrency Research and Engineering.