A differential pulse encoding and decoding approach for binary data transmissions, such as binary frequency shift keying (BFSK) data transmissions, for sending and recovering a serial, binary digital data stream by differentiating the pulses thereof. A method and system are disclosed for transmitting from a transmitter to a receiver a digital data signal containing a stream of binary data bits having a first high value and a second low value. At the transmitter, the digital signal is transformed into a differential signal which contains pulses corresponding to transitions between the first and second values. The digital signal is transformed into the differential signal by an encoder which can be a differentiator circuit or an RC high-pass filter circuit. If frequency spectrum is a concern, a low-pass filter can filter the output of the encoder. The differential signal is then transmitted, and received by the receiver which reconstructs the original digital signal therefrom. The transmission of the differential signal can be by a transmission cable or by an FM transmitter and receiver. At the receiver, the digital signal is reconstructed from the differential signal by a decoder circuit which functions to produce a high voltage output signal when the input signal is higher than a reference high voltage, and a low voltage output signal when the input signal is lower than a reference low voltage. A low-pass filter can also filter the input to the decoder circuit.