CEO Nevin Freeman of stablecoin startup Reserve predicts that central banks will tokenize their currency at some point, but stablecoins will likely still have an advantage in offering privacy.

Freeman delivered his remarks at the Consensus 2019 panel “The End of Volatility? Stablecoins on the Rise” on May 15.

During the panel, moderator Joel Telpner, a partner at Sullivan & Worcester LLP, asked the speakers why banks could not simply tokenize their national currency and drive fiat-backed stablecoin services out of business.

Freeman replied that he thinks banks will do this, but will not offer the same privacy of current stablecoin services. He thinks that central banks would want to track transaction history and ownership of the tokenized funds.

However, he argues that wealthy businesses and people will choose a service that offers privacy in their transactions over another that has the only potential upside of being issued by a central bank.

In an interview at the conference with Freeman, a Cointelegraph correspondent asked whether stablecoins such as TrueUSD and Paxos are actually anonymous. Freeman responded that when converting from fiat to crypto and vice versa, your identity is checked and verified. All the transactions in token form, however, are pseudo-anonymous.

Freeman added that Reserve, for its own part, aims to make a “stable bitcoin.” He told a Cointelegraph correspondent:

“We are trying to create stable bitcoin. These other projects that are fiat-backed… they are very useful but they are legitimate trustworthy versions of tether, they are not stable versions of bitcoin. And the critical piece is that they are missing is that if you want to be a stable version of bitcoin is that everyone can see that the thing is just there, in reality, and can not be shut off no matter what anyone thinks of it.”

Pseudo-anonymity is the term used to describe the privacy offered by cryptocurrencies such as bitcoin (BTC), since bitcoin balances and transactions are public, even though there is no public identity associated with the addresses involved.

As previously reported on Cointelegraph, bitcoin developer Pieter Wuille has recently published two proposals for a taproot soft-fork, which aims to provide more privacy for bitcoin users by hiding transaction details via techniques involving the Merkelized Abstract Syntax Tree and the Schnorr signature scheme.