Formaleuros, Formalbitcoins, and Virtual Monies

Formalist positions towards money are considered from a perspective of formal methods in computing. The Formaleuro (FEUR) as a dimension for monetary quantities is proposed as well as the Formalbitcoin (FBTC) which represents an item ready for circulation in a model of informational money. An attempt is made to understand the concept of money from scratch. In order to provide a definition of money the need is felt to make use of a tailored theory of definition. To that end a theory of imaginative definitions is presented and its implications for definitions of money are sketched. It is argued that a theory of money may be dependent on the role of its holder. A survey of some roles is given, with the so-called subordinate administrative role (SAR) in a central position. The concepts of virtual memory and virtual machine are taken as the point of departure for a definition of the notion of virtual money. It is argued that from the perspective of a component (division) of a large organization (ORG) its local financial system (LFS) provides a virtual money vm(LFS, ORG) which may well fail to meet the most common general and acknowledged moneyness criteria. Inverse moneyness preference is coined as phrase to assert the tendency of top-management of ORG to make its virtual money deviate from these criteria.

💡 Research Summary

The paper proposes a novel, formal‑methods‑driven perspective on money, arguing that traditional monetary theory—rooted in empirical, legal, and sociological premises—fails to capture the complexities of today’s digital and organizational finance. To overcome this, the author introduces a “theory of imaginative definitions,” a meta‑theoretical framework that constructs definitions inside a purely formal, imagined world and then checks their internal consistency much like a type system in programming languages. This approach allows money itself to be modeled as a formal object rather than an empirical artifact.

Two formal monetary units are defined. The FormalEuro (FEUR) is an abstract quantity that shares the dimensionality of the real Euro but exists as a mathematically manipulable data type with explicitly specified arithmetic and logical operations. The FormalBitcoin (FBTC) represents a circulating item within an informational‑money model; it is a formalization of blockchain transactions as a state‑transition system with formally specified consensus rules. Both units reside in the same formal framework, making systematic conversion and simulation possible.

A central claim is that the definition of money depends on the role of its holder. The author calls this “role‑dependent definition” and focuses on the Subordinate Administrative Role (SAR), analogous to an internal accounting or budgeting department. SAR’s policies shape the monetary unit’s functions—store of value, medium of exchange, unit of account—within a confined institutional context, effectively creating a “local” currency that is distinct from any external legal tender.

Building on the concepts of virtual memory and virtual machines, the paper defines a “virtual money” vm(LFS, ORG) for a division (or component) of a large organization (ORG) that operates its own Local Financial System (LFS). This virtual money is a formal object characterized by the LFS’s accounting rules and state‑transition semantics. Crucially, vm(LFS, ORG) may violate the conventional moneyness criteria (value preservation, exchange facilitation, accounting unit) because top‑management may deliberately design it to serve strategic objectives such as internal cost shifting, tax optimization, or performance‑based incentives. The author coins the term “inverse moneyness preference” to describe this systematic deviation from standard monetary properties.

The paper then explores the practical implications of such formal models. By applying formal verification techniques, designers can ensure that a virtual money’s rules are internally consistent, secure, and aligned with policy goals, thereby reducing financial risk within the organization. Moreover, explicitly modeling inverse moneyness preferences enables early detection of governance abuses or unintended economic distortions. However, the author warns that an overly abstract formal model can become detached from real‑world constraints, suggesting a hybrid approach that couples formal specification with empirical validation.

In summary, the work reframes money as a formally defined artifact, introduces role‑centric and virtual‑money concepts, and demonstrates how formal methods can illuminate the hidden dynamics of digital currencies and intra‑organizational finance. It offers scholars, policymakers, and system architects a rigorous toolkit for analyzing, designing, and governing emerging monetary systems in an increasingly algorithmic economy.