BitLedger Protocol v3.0

40 Bits.
One Transaction.

A complete double-entry accounting record — both sides, full classification, direction, status, value, rounding metadata, and currency — in five bytes.

BitLedger is a binary-native financial record and transmission protocol designed from first principles at the binary representation of accounting states. Every bit position carries defined meaning. No layer ends with unused zero-padded bits. The rules of double-entry accounting are enforced at the encoding level — not as a rule the application must check, but as a structural property of the wire format.

Layer 1

Session Header

8 bytes

Sender ID · permissions · CRC-15 · session defaults. Once per session.

Layer 2

Batch Header

6 bytes

Currency · scaling · precision · rounding balance. Once per batch.

Layer 3

Transaction Record

5 bytes

Value block (25 bits) · flag bits (7) · accounting block (8). Per transaction.

Control

Control Record

1 byte

ACK · batch close · band change · session events. On demand.

100 transactions. Layer 1 (64 bits) + Layer 2 (48 bits) + 100 × Layer 3 (40 bits) = 4,112 bits — 514 bytes. A comparable JSON representation: 50,000–200,000 bytes. The reduction is structural, not compressive. No decompression step.

The Core Record

Layer 3 — The 40-Bit Transaction

Five bytes. Every bit earns its position. The 25-bit value block carries any amount from zero to $33,554,431 at base precision — scaled arbitrarily via Layer 2. Seven flag bits qualify the value and provide three independent error-detection surfaces. Eight bits carry the complete double-entry accounting classification.

BITS 1–25 (VALUE BLOCK) · BITS 26–32 (FLAGS) · BITS 33–40 (ACCOUNTING)

Bits 1–25 — Value Block (25 bits)

1AMult-
icand

···AA
cont.

17AA
end

18rRemain-
der

···rr
cont.

25rr
end

Bits 26–32 — Flag Bits (7 bits)

26RndRound
Flag

27DirRound
Dir.

28SplSplit
Order

29+/-Direction
↕

30P/FStatus
P/F

31D/CDebit/
Credit

32QtyQty
Present

Bits 33–40 — Accounting Block (8 bits)

33APAcct
Pair

34APAP
cont.

35APAP

36APAP
end

37DirDirection
=bit29

38StsStatus
=bit30

39CmpComplete
-ness

40ExtExt.
Flag

Value block Flag bits Accounting block bit29 = bit37 · bit30 = bit38 · cross-layer validation

25-Bit Value Block

Value Encoding — N = A × 2^S + r

The 25-bit value block encodes any integer from 0 to 33,554,431 without gaps using the formula N = A × 2^S + r, where S is the Optimal Split from Layer 2 (default 8). At S=8: A occupies the upper 17 bits (0–131,071) and r occupies the lower 8 bits (0–255). The maximum N = 131,071 × 256 + 255 = 33,554,431.

N = A × 2^S + r · A = ⌊N / 2^S⌋ · r = N mod 2^S

Combined with Layer 2 Scaling Factor and Decimal Position:

Real Value = (N × Scaling Factor) / 10^{Decimal Position}

Worked Examples

── EXAMPLE 1 ─ $4.53 exact flat value ─────────────────────

Layer 2 SF=×1, DP=2 (step $0.01)

Target $4.53 → V = 453 (integer)

Encode A = ⌊453/256⌋ = 1 r = 453 mod 256 = 197

Bits 1-1700000000000000001 (A=1)

Bits18-2511000101 (r=197)

Bit 26 0 = exact (no rounding)

Decode N = 1×256+197 = 453 → $4.53

─────────────────────────────────────────────────────────────

── EXAMPLE 2 ─ $98,765.43 large value ──────────────────────

Layer 2 SF=×1, DP=2

Target $98,765.43 → V = 9,876,543

Check 9,876,543 ≤ 33,554,431 ✓

Encode A = ⌊9,876,543/256⌋ = 38,580 r = 63

Decode N = 38,580×256+63 = 9,876,543 → $98,765.43

─────────────────────────────────────────────────────────────

── EXAMPLE 3 ─ 24 units at $2.49 each (quantity split) ─────

Layer 2 SF=×1, DP=2, Optimal Split S=8

Bit 32 1 = Quantity Present

Encode A = 249 (price in cents) r = 24 (quantity)

Decode N = 249×24 = 5,976 → $59.76

─────────────────────────────────────────────────────────────

── EXAMPLE 4 ─ $2,450,000.00 large corporate ───────────────

Layer 2 SF=×100, DP=2 (step=$1.00, max=$33,554,431)

Encode N = 2,450,000 / 100 = 24,500

A = ⌊24,500/256⌋ = 95 r = 180

Decode N = 95×256+180 = 24,500 → 24,500×100/100 = $2,450,000.00

─────────────────────────────────────────────────────────────

── EXAMPLE 5 ─ $1,847,293,651.37 via compound continuation ─

Strategy Split across 2 records — compound mode

Record 1: billions component

Layer 2 SF=×100,000, DP=2 (step=$1,000)

Encode $1,847,293,000 / 1,000 = 1,847,293

Bit 39 1 = partial, continuation follows

Record 2: sub-thousand component (1111 continuation)

Layer 2 SF=×1, DP=2

Encode $651.37 → N = 65,137

Bit 39 0 = complete, compound closed

Sum $1,847,293,000.00 + $651.37 = $1,847,293,651.37 exact

─────────────────────────────────────────────────────────────

Value Encoder — N = A × 2^S + r

Target value

SF ×

S bits

Bits 26–32

Flag Bits — Seven Qualifiers

Seven flag bits qualify the value block. Three pairs provide cross-layer error detection and accounting semantics. One invalid bit state (bit26=0, bit27=1) forms a third independent error detection layer.

Bit

Field

Description

Rounding Flag

0 = exact value, no precision loss. 1 = value is rounded — bit 27 carries direction. Encoder must set this whenever rounding occurs.

Rounding Direction

Only valid when bit 26=1. 0 = rounded down (floor). 1 = rounded up (ceiling). State 01 (bit26=0, bit27=1) is a protocol error — immediately detectable.

Split Order

0 = follow session default (Layer 1 bit 9). 1 = reverse session default for this record only. No separate setup byte required.

Direction ±

0 = Plus / In — value received. 1 = Minus / Out — value disbursed. MUST = bit 37 Cross-layer validation rule 1. Mismatch → record rejected.

Status P/F

0 = Past / Paid — settled, cash basis. 1 = Future / Debt — accrued, not yet settled. MUST = bit 38 Cross-layer validation rule 2.

Debit / Credit

0 = Credit side primary. 1 = Debit side primary. Resolves which account in the pair takes the debit.

Quantity Present

0 = all 25 bits are a flat total. 1 = Optimal Split active — upper bits = price/unit, lower bits = quantity. When 1, split always taken from Layer 2.

Cross-layer validation: bit 29 must equal bit 37, and bit 30 must equal bit 38. A single-bit corruption in either location is immediately detectable. Three independent error surfaces operate on every 40-bit record with no dedicated checksum field.

Bits 33–36

Account Pair Table — All 16 Codes

A 4-bit field encoding both sides of the double-entry. Fourteen valid pairs cover all canonical accounting relationships. Code 1110 suspends inference for correction entries. Code 1111 is the compound continuation marker (only valid when compound mode is active in the session).

Code	Account Pair	Direction In → Primary	Direction Out → Primary
0000	Op Expense / Asset	Expense receives goods or service	Expense reversal, return to supplier
Typical use: Purchase of supplies, inventory receipt, service delivery. ── 0000 · Op Expense / Asset ───────────────────── Account pair 0000 Bit 31 = 1 Debit: Op Expense Bit 31 = 0 Credit: Asset (Cash or A/P) Example Office supplies $240.00 Journal DR Office Supplies Exp 240.00 / CR Cash 240.00 ─────────────────────────────────────────────────
0001	Op Expense / Liability	Expense incurred on credit	Liability reduces, expense reversed
Typical use: Accrued expenses, payroll liabilities, taxes payable. ── 0001 · Op Expense / Liability ───────────────── Example Payroll accrual $12,500.00 Journal DR Wages Expense 12,500 / CR Wages Payable 12,500 ─────────────────────────────────────────────────
0010	Non-Op Expense / Asset	Non-core expense from asset	Non-core expense reversal
Typical use: Interest expense paid from cash, one-time write-off.
0011	Non-Op Expense / Liability	Non-core expense on credit	Non-core liability reduces
Typical use: Interest expense accrued but not yet paid.
0100	Op Income / Asset	Revenue received as asset	Revenue reversed, asset returned
Typical use: Cash sale — revenue earned and cash received simultaneously. ── 0100 · Op Income / Asset ────────────────────── Example Cash sale $850.00 Journal DR Cash 850.00 / CR Sales Revenue 850.00 ─────────────────────────────────────────────────
0101	Op Income / Liability	Revenue earned, not yet received	Earned revenue reversed
Typical use: Accounts receivable — service rendered, invoice issued, payment pending.
0110	Non-Op Income / Asset	One-time income received	One-time income reversed
Typical use: Asset sale gain, investment return, insurance proceeds.
0111	Non-Op Income / Liability	One-time income earned on credit	Credit income reversed
Typical use: Deferred income, subscription revenue not yet earned.
1000	Asset / Liability	Asset acquired on credit	Liability repaid from asset
Typical use: Equipment purchase on credit, loan repayment. ── 1000 · Asset / Liability ────────────────────── Example Equipment purchase $45,000 on credit Journal DR Equipment 45,000 / CR Notes Payable 45,000 ─────────────────────────────────────────────────
1001	Asset / Equity	Owner contributes asset	Asset distributed to owner
Typical use: Owner capital contribution, dividend distribution.
1010	Liability / Equity	Equity converts to liability	Liability converts to equity
Typical use: Convertible note conversion, debt-to-equity swap.
1011	Asset / Asset	Asset received — internal transfer	Asset disbursed — internal transfer
Typical use: Cash-to-investment transfer, inter-account movement.
1100	Suspense / Clearing	Entry to suspense pending classification	Clearing suspense after classification
Typical use: Unidentified receipts, in-transit items, pending reconciliation.
1101	Inter-Company	Inter-entity receivable	Inter-entity payable
Typical use: Transactions between related entities, consolidation eliminations.
1110	Correction / Netting	Correction entry (inference suspended)	Netting entry
Typical use: Error corrections, prior-period adjustments, netting arrangements. Account pair inference is suspended — the opposing account is explicit in an extension byte.
1111	Compound Continuation	Links this record to its predecessor as part of one logical multi-leg transaction. Only valid when compound mode is active in session (Layer 1 bit 11=1) and batch Compound Prefix ≠ 00.
See Compound Mode for full specification of continuation sub-types and completeness semantics.

Batch Context

Layer 2 — Batch Header (48 bits / 6 bytes)

Transmitted once before each batch. Establishes the decoding context that every record in the batch inherits. No record repeats Layer 2 information. When all values match session defaults, a single control byte replaces the entire 48-bit header.

Bits	Field	Values	Description
1–2	Transmission Type	01–11	01=Pre-converted. 10=Copy from sender. 11=Represented entity. 00=protocol error.
3–9	Scaling Factor	0–127	Denomination multiplier. Index into powers of 10: 0=×1, 1=×10, 2=×100, 3=×1,000…
10–13	Optimal Split (S)	0–15	Bits allocated to Multiplier field. Default 8: 17-bit value + 8-bit quantity. Governs the N = A × 2^S + r formula.
14–16	Decimal Position	000–111	000=integer, 001=1dp, 010=2dp (standard), 011=3dp, 100=4dp (forex), 101=5dp, 110=6dp (crypto), 111=extension byte.
17	Enquiry Bell	0/1	1 = sender requests ACK of this batch before proceeding.
18	Acknowledge Bell	0/1	1 = receiver confirms receipt of previous batch.
19–22	Group Separator	4 bits	15 group identifiers — accounting periods, quarters, organisational divisions.
23–27	Record Separator	5 bits	31 record-group identifiers. In compound mode: current value is the implicit compound group ID.
28–30	File Separator	3 bits	7 file identifiers — associates batches with logical file structures.
31–35	Entity ID	00000–11111	Sub-entity attribution. Matches Layer 1 Sub-Entity ID in standard mode; differs in represented-entity mode.
36–41	Currency Code	000000–111111	64 codes. 000000=session default. 000001–011111=standard currencies. 100000–111110=user-defined. 111111=multi-currency.
42–45	Rounding Balance	4-bit signed	Net rounding adjustment for batch (sign-magnitude). 0000=balanced. 1000=escape (see batch-close control record).
46–47	Compound Prefix	00–11	00=no compound records. 01=up to 3 groups. 10=up to 7. 11=unlimited. Prepares receiver before first record.
48	Reserved	1	Always transmit as 1. Ensures final byte of Layer 2 is never all-zeros.

Session Identity & Integrity

Layer 1 — Session Header (64 bits / 8 bytes)

Transmitted once at session open. Establishes sender identity, permissions, session-level defaults, and the CRC-15 checksum that protects all subsequent records. A corrupt session header would cause every record to be decoded against wrong identity or defaults — the CRC catches this at session open before any records are processed.

Bits	Field	Description
1	SOH Marker	Always 1. Self-framing — the leading 1 triggers protocol state in the receiver. No preamble or sync byte required.
2–4	Protocol Version	000–111. Receivers reject sessions with unsupported version codes.
5–8	Core Permissions	Bit 5: Read. Bit 6: Write. Bit 7: Correct/Amend. Bit 8: Represent third party. All four must be set appropriately before records are accepted.
9–12	Session Defaults	Bit 9: Split order default. Bit 10: Opposing account convention. Bit 11: Compound mode active. Bit 12: BitLedger block optional.
13–44	Sender ID	32-bit unique sender identifier. Supports 4,294,967,295 distinct senders. Reducible to 16 bits on closed networks.
45–49	Sub-Entity ID	31 sub-divisions per sender. In represented-entity mode, Layer 2 Entity ID intentionally differs from this field.
50–64	CRC-15 Checksum	Computed over bits 1–49. Polynomial x^15 + x + 1 (0x8003). Zero remainder = session accepted. Non-zero = session rejected, NACK sent.

CRC-15 Algorithm

── CRC-15 ENCODER ────────────────────────────────────────

Polynomial G = x^15 + x + 1 = 0x8003

Input P = bits 1–49 of Layer 1 (49-bit payload)

Step 1 Append 15 zero bits: W = P[1..49] + 000000000000000

Step 2 For each bit i from 1 to 49:

if leading bit of W == 1: W = W XOR (G << align)

shift W left by 1

Step 3 Remainder R = final 15 bits of W

Step 4 Transmit bits 1–49 followed by R (total 64 bits)

── CRC-15 DECODER ────────────────────────────────────────

Step 1 Run CRC-15 over all 64 received bits

Step 2 Result == 0x0000 → session accepted

Result != 0x0000 → send NACK, reject session

Coverage 100% single-bit · 100% burst ≤15 bits · 99.997% other

─────────────────────────────────────────────────────────

The Invariant

Conservation — The Batch Balance Check

For every batch, the signed sum of all flows must equal zero. This is the binary wire-level expression of double-entry accounting's fundamental rule — identical in algebra to Kirchhoff's current law applied to any node. The protocol checks this before the application sees the records.

CONSERVATION INVARIANT

batch_balance = 0

for each record in batch:

if bit29 == 0 (Plus/In): batch_balance += signed_value

if bit29 == 1 (Minus/Out): batch_balance -= signed_value

if batch_balance != 0:

BATCH INVALID → reject, NACK, request retransmission

A CRC-15 catches bit-level corruption. Cross-layer validation (bit29=bit37, bit30=bit38) catches field corruption. The conservation invariant catches something neither can: phantom flows, missing records, duplicated records — logical errors that leave every individual record intact but violate the double-entry balance. Three independent detection layers, zero overhead fields.

Kirchhoff's current law: the sum of currents at any node equals zero. Structurally identical to double-entry balance. The same algebra governs financial accounting, electrical current distribution, mass balance in chemical reactors, and propellant conservation in spacecraft. BitLedger's Universal Domain recognises this — switching the domain bits changes the semantic interpretation, not the invariant.

Session Management

Control Records (1 byte)

8-bit control records handle session events without inflating the record stream. Type codes 000–111 cover all standard session management events. A control record is always 1 byte.

Type	Name	Purpose
000	Session Open	Opens a new session context. Triggers Layer 1 header transmission.
Signals the receiver to prepare for a Layer 1 session header. Self-framing via the SOH marker in Layer 1 bit 1.
001	Session Close	Terminates the current session. Receiver finalises conservation check.
Triggers final batch balance validation. Any open compound groups are marked incomplete. Session state cleared.
010	Batch Open	Opens a new batch. Layer 2 header follows.
Receiver prepares to receive a 48-bit Layer 2 batch header. Rounding balance resets to zero for the new batch.
011	Batch Close	Closes the current batch. Conservation check runs.
The batch balance sum is verified. If rounding balance exceeded the 4-bit escape (1000), the batch-close payload carries the full rounding value.
100	ACK	Positive acknowledgement of the previous batch or record.
Response to an Enquiry Bell (Layer 2 bit 17). Sender may proceed with next batch. A two-byte verified handshake when combined with Echo.
101	NAK / Parameter Update	Negative acknowledgement or mid-batch parameter update.
When used as NAK: requests retransmission of the rejected batch. When used as parameter update: the following byte specifies which parameter changes (e.g. Optimal Split for a record group).
110	Status	Transmits receiver status without a full record.
Used for liveness, error reporting, and mode signalling. A 1-byte status control carrying the status code in the lower 5 bits.
111	Custom / Extension	User-defined or future-protocol control. Extension byte follows.
Reserved for application-layer extensions and future protocol versions. The following byte declares the custom control type.

Why It Matters

Efficiency — Structural, Not Compressive

The reduction in wire bytes is structural. No decompression. No schema lookup. The decoder reads fixed bit positions and the record is decoded. On a link measured in bits per second — a satellite uplink, an industrial serial bus, a narrowband IoT radio — this matters at a level verbose formats cannot match.

Format	100 Transactions	Relative Size	Notes
BitLedger v3	514 bytes	1×	Layer 1 + Layer 2 + 100 × 5B. No decompression.
Fixed binary (ISO 8583-style)	~3,000 bytes	5.8×	No session CRC, no conservation invariant, no double-entry semantics.
CSV fixed-width (ACH-style)	~15,000 bytes	29×	Text encoding, no per-record integrity, batch settlement only.
JSON	~80,000 bytes	155×	Schema-dependent, string parsing required, no integrity mechanism.
ISO 20022 XML	~200,000 bytes	389×	Standards-compliant but requires full XML parser. Designed for nightly settlement, not real-time low-bandwidth links.

bits per transaction

independent error surfaces

4.29B

max sender IDs

$33.5Q

max value per record

40 Bits.One Transaction.

Layer 3 — The 40-Bit Transaction

Value Encoding — N = A × 2S + r

Worked Examples

Flag Bits — Seven Qualifiers

Account Pair Table — All 16 Codes

Layer 2 — Batch Header (48 bits / 6 bytes)

Layer 1 — Session Header (64 bits / 8 bytes)

CRC-15 Algorithm

Conservation — The Batch Balance Check

Control Records (1 byte)

Efficiency — Structural, Not Compressive

40 Bits.
One Transaction.

Value Encoding — N = A × 2^S + r