Tobacco Giant Philip Morris Is Building a Different Kind of 'Public' Blockchain

Tobacco giant Philip Morris International is working on a "public blockchain," an executive said, though not quite in the commonly understood sense of the term.

"We want to do public blockchains," Nitin Manoharan, Philip Morris' global head of architecture and tech innovation, said onstage Thursday at the London Blockchain Expo.

Specifically, the New York-based multi-national company would use this technology to track tax stamps on cigarette boxes, Manoharan said. While that may sound prosaic, he said these bits of paper are valuable (worth about $5.50 per packet), manually dealt with and easily counterfeited (generally fraudsters use a high-resolution photocopier), costing the industry and governments $100 million a year.

Manoharan estimated that Philip Morris alone could save $20 million off the bat by automating processes and reducing fraud with the traceability and transparency afforded by a blockchain.

And while most enterprise blockchains are permissioned, meaning only approved parties are allowed to participate, the one Philip Morris envisions in this instance would be widely accessible. After his panel discussion, Manoharan told CoinDesk:

"The aspiration is an industry-wide blockchain that interested stakeholders can come in and subscribe to it and benefit from it. If they see no value they can just leave."

When asked specifically if that meant anyone could run a node without permission, he said yes, acknowledging they would need an incentive to do so.

"We want to make sure that the minimum viable ecosystem we put in place is attractive to all the stakeholders who participate in this particular ecosystem," he said. "So there needs to be a value proposition, there needs to be a reason for taking part. Because if there’s not sufficient value on the table they will not engage. So the only way to make it sustainable is to ensure stakeholders benefit from this blockchain."

However, this does not necessarily mean Philip Morris is creating a cryptocurrency or building on top of the public ethereum blockchain. Rather, according to Manoharan, it is tailoring ethereum and MultiChain, Coin Sciences' build-your-own-blockchain platform for enterprises, to create this new open-access network. Philip Morris is also talking to the Hyperledger consortium, he added.

Public-private potpourri

Tax stamp tracking is one of six blockchain use cases that Philip Morris is exploring and looking to go live with next year, according to Manoharan.

"We view it use case by use case," he said. "But this particular use case, for me it's a public blockchain use case. I wouldn't say public for all of them: there are quite a few use cases that are purely internal and need to go through access control etc."

Nevertheless, he said open networks hold the greatest promise, concluding:

"Permissioned blockchains are fairly simple. The opportunity is small and you can achieve everything that permissioned blockchain does with existing infrastructure and existing tools. The real value is with public blockchains where you can have multiple players coming in and participating in a trustless manner."

Nitin Manoharan (center) at the London Blockchain Expo, photo by Ian Allison for CoinDesk