diff --git a/swarm/storage/binarymerkle.go b/swarm/storage/binarymerkle.go
new file mode 100644
index 0000000000..0c31db1698
--- /dev/null
+++ b/swarm/storage/binarymerkle.go
@@ -0,0 +1,315 @@
+package storage
+
+// provides a binary merkle tree implementation.
+
+import (
+	"bytes"
+	_ "crypto/sha256"
+	"encoding/binary"
+	"fmt"
+
+	"github.com/ethereum/go-ethereum/crypto/sha3"
+)
+
+var hashFunc Hasher = sha3.NewKeccak256 //default hasher
+
+// A merkle tree for a user that stores the entire tree
+// Specifically this tree is left a leaning balanced binary tree
+// Where each node holds the hash of its leaves
+// And the rootHash is the root node hashed with the count
+// This tree is immutable
+type BTree struct {
+	count    uint64
+	root     *node
+	rootHash []byte
+	//hashFunc Hasher
+}
+
+type node struct {
+	label    []byte
+	children [2]*node // if all nil, leaf node
+
+	// Representation invariants:
+	// if children[0] is nil, children[1] is nil
+	// if both children non nil:
+	//      label is hash of (children[0].label + children[1].label)
+	// if leaf: label is arbitrary data
+	// else if children[1] is nil, label=hash(children[0].label)
+}
+
+func (t BTree) Count() uint64 {
+	return t.count
+}
+
+// The hash/root of an empty BTree does not matter
+func (t BTree) Root() []byte {
+	return t.rootHash
+}
+
+// All trees should pass , unless they are invalid, which should only happen
+// if incorrectly built or modified.
+// Checks the rep invariants
+func (t BTree) Validate() error {
+	count, height, error := t.root.validate()
+	if error != nil {
+		return error
+	}
+	if count != t.count {
+		return fmt.Errorf("Incorrect count. Was %d, should be %d", t.count, count)
+	}
+	if height != GetHeight(count) {
+		return fmt.Errorf("Incorrect height. Was %d, should be %d", height, GetHeight(count))
+	}
+
+	rootLabel := make([]byte, 0)
+	if height > 0 {
+		rootLabel = t.root.label
+	}
+	h := rootHash(count, rootLabel)
+	if !bytes.Equal(t.rootHash, h) {
+		return fmt.Errorf("Incorrect rootHash")
+	}
+	return nil
+}
+
+// Checks the rep invariants
+func (t *node) validate() (count uint64, height int, err error) {
+	if t == nil {
+		return 0, 0, nil
+	}
+	if t.children[0] == nil {
+		if t.children[1] != nil {
+			return 0, 0, fmt.Errorf("Invalid Node: Node missing first child, but has second")
+		}
+		// Leaf node
+		return 1, 1, nil
+	}
+
+	// Not a leaf node
+	count, height, err = t.children[0].validate()
+	if err != nil {
+		return
+	}
+	if t.children[1] != nil {
+		count2, height2, err2 := t.children[1].validate()
+		count += count2
+		if err2 != nil {
+			return count, height, err2
+		}
+		if height2 != height {
+			return count, height, fmt.Errorf("Invalid Node: height mismatch between children")
+		}
+	}
+	h := makeHash(t.children[0], t.children[1])
+	if !bytes.Equal(h, t.label) {
+		return 0, 0, fmt.Errorf("Invalid Node: Node hash mismatch")
+	}
+
+	height++
+	return
+}
+
+func rootHash(count uint64, data []byte) []byte {
+	h := hashFunc()
+	h.Reset()
+	h.Write(data)
+	binary.Write(h, binary.LittleEndian, count)
+	return h.Sum(make([]byte, 0))
+}
+
+func makeHash(left, right *node) []byte {
+	h := hashFunc()
+	h.Reset()
+	if left != nil {
+		h.Write(left.label)
+		if right != nil {
+			h.Write(right.label)
+		}
+	}
+	return h.Sum(make([]byte, 0))
+}
+
+// Returns the height of the tree containing count leaf nodes.
+// This the number of nodes (including the final leaf) from the root to
+// any leaf.
+func GetHeight(count uint64) int {
+	if count == 0 {
+		return 0
+	}
+	height := 0
+	for count > (1 << uint(height)) {
+		height++
+	}
+	return height + 1
+}
+
+// Build Binary Merkle Tree over data segments of segmentsize len with a specific hash func
+// Return
+// BMT - The BMT Representation of the data
+// ROOT - BMT Root
+// Count - Numers of leafs at the BMT
+// error - if exist validation(-1) count(-2) ok(0)
+func BuildBMT(h Hasher, data []byte, segmentsize int) (bmt *BTree, roor *Root, count int, errorcode int) {
+	blocks := splitData(data, segmentsize)
+	hashFunc = h
+	leafcount := len(blocks)
+	tree := Build(blocks)
+	err := tree.Validate()
+	if err != nil {
+		return nil, nil, 0, -1
+	}
+	if tree.Count() != uint64(leafcount) {
+		return nil, nil, 0, -2
+	}
+
+	return tree, &Root{uint64(leafcount), tree.Root()}, leafcount, 0
+	//r := Root{uint64(count), tree.Root()}
+
+}
+
+// Build a tree
+func Build(data [][]byte) *BTree {
+	count := uint64(len(data))
+	height := GetHeight(count)
+	node, leftOverData := buildNode(data, height)
+	if len(leftOverData) != 0 {
+		panic("Build failed to consume all data")
+	}
+	rootLabel := make([]byte, 0)
+	if height > 0 {
+		rootLabel = node.label
+	}
+	hash := rootHash(count, rootLabel)
+	t := BTree{count, node, hash}
+	return &t
+}
+
+// returns a node and the left over data not used by it
+func buildNode(data [][]byte, height int) (*node, [][]byte) {
+	if height == 0 || len(data) == 0 {
+		return nil, data
+	}
+	if height == 1 {
+		// leaf
+		return &node{label: data[0]}, data[1:]
+	}
+	n0, data := buildNode(data, height-1)
+	n1, data := buildNode(data, height-1)
+
+	hash := makeHash(n0, n1)
+	return &node{label: hash, children: [2]*node{n0, n1}}, data
+}
+
+func splitData(data []byte, size int) [][]byte {
+	/* Splits data into an array of slices of len(size) */
+	count := len(data) / size
+	blocks := make([][]byte, 0, count)
+	for i := 0; i < count; i++ {
+		block := data[i*size : (i+1)*size]
+		blocks = append(blocks, block)
+	}
+	if len(data)%size != 0 {
+		blocks = append(blocks, data[len(blocks)*size:])
+	}
+	return blocks
+}
+
+// Return a [][]byte needed to prove the inclusion of the item at the passed index
+// The payload of the item at index is the first value in the proof
+func (t *BTree) InclusionProof(index int) [][]byte {
+	if uint64(index) >= t.count {
+		panic("Invalid index: too large")
+	}
+	if index < 0 {
+		panic("Invalid index: negative")
+	}
+	h := GetHeight(t.count)
+	fmt.Println(h)
+	return proveNode(h, t.root, index)
+}
+
+func proveNode(height int, n *node, index int) [][]byte {
+	if height == 1 {
+		if index != 0 {
+			panic("Invalid index: non 0 for final node")
+		}
+		return [][]byte{n.label}
+	}
+	childIndex := index >> uint(height-2)
+	nextIndex := index & (^(1 << uint(height-2)))
+	b := proveNode(height-1, n.children[childIndex], nextIndex)
+	otherChildIndex := (childIndex + 1) % 2
+	if n.children[otherChildIndex] != nil {
+		b = append(b, n.children[otherChildIndex].label)
+	}
+	return b
+}
+
+// The Root of a merkle tree for a client that does not store the tree
+type Root struct {
+	Count uint64
+	Base  []byte
+}
+
+// Proves the inclusion of an element at the given index with the value thats the first entry in proof
+func (r *Root) CheckProof(h Hasher, proof [][]byte, index int) bool {
+	hashFunc = h
+	t_height := GetHeight(r.Count)
+	root, ok := checkNode(t_height, proof, uint64(index), r.Count)
+	base := rootHash(r.Count, root)
+	return ok && bytes.Equal(r.Base, base)
+}
+
+func checkNode(height int, proof [][]byte, index, count uint64) ([]byte, bool) {
+	if len(proof) == 0 {
+		fmt.Println("Empty")
+		return nil, false
+	}
+	if count <= index {
+		fmt.Println("bad count", count, index)
+		return nil, false
+	}
+
+	if height == 1 {
+		if index != 0 || len(proof) != 1 {
+			fmt.Println("BAD", index, proof)
+			return nil, false
+		}
+		return proof[0], true
+	}
+
+	childIndex := index >> uint(height-2)
+	mask := uint64(^(1 << uint(height-2)))
+	nextIndex := index & mask
+
+	var data []byte
+	var ok bool
+
+	h := hashFunc()
+	h.Reset()
+	//	h:=hashFunc.New()
+	var nextCount uint64
+	last := len(proof) - 1
+	if childIndex == 1 {
+		nextCount = count & mask
+		h.Write(proof[last])
+		data, ok = checkNode(height-1, proof[:last], nextIndex, nextCount)
+		h.Write(data)
+	} else {
+		nextCount = count
+		if count > ^mask {
+			nextCount = ^mask
+		}
+		if count == nextCount {
+			data, ok = checkNode(height-1, proof, nextIndex, nextCount)
+			h.Write(data)
+		} else {
+			data, ok = checkNode(height-1, proof[:last], nextIndex, nextCount)
+			h.Write(data)
+			h.Write(proof[last])
+		}
+	}
+
+	hash := h.Sum(make([]byte, 0))
+	return hash, ok
+}
diff --git a/swarm/storage/binarymerkle_test.go b/swarm/storage/binarymerkle_test.go
new file mode 100644
index 0000000000..98ddc13fbe
--- /dev/null
+++ b/swarm/storage/binarymerkle_test.go
@@ -0,0 +1,123 @@
+package storage
+
+import (
+	"fmt"
+	"io/ioutil"
+	"testing"
+
+	"github.com/ethereum/go-ethereum/crypto/sha3"
+)
+
+func TestGetHeight(t *testing.T) {
+	data := [][2]int{
+		{0, 0},
+		{1, 1},
+		{2, 2},
+		{3, 3},
+		{4, 3},
+		{255, 9},
+		{256, 9},
+		{257, 10},
+	}
+	for _, v := range data {
+		h := GetHeight(uint64(v[0]))
+		if !(v[1] == h) {
+			t.Errorf("GetHeight(%d)!=%d (was %d)", v[0], v[1], h)
+		}
+	}
+}
+
+func TestGetHeight2(t *testing.T) {
+	for i := 1; i < 1000; i++ {
+		h := GetHeight(uint64(i))
+		upperBound := 1 << uint(h-1)
+		lowerBound := (1 << uint(h-2)) + 1
+		if i < lowerBound {
+			t.Errorf("GetHeight(%d) too high: %d", i, h)
+		}
+		if i > upperBound {
+			t.Errorf("GetHeight(%d) too low: %d", i, h)
+		}
+	}
+}
+
+func TestBuildBMT(t *testing.T) {
+
+	// Grab some data to make the tree out of, and partition
+	data, err := ioutil.ReadFile("binarymerkle_test.go") // assume testdata exists
+	if err != nil {
+		fmt.Println(err)
+		return
+	}
+
+	tree, r, count, err1 := BuildBMT(sha3.NewKeccak256, data, 32)
+
+	switch err1 {
+	case -1:
+
+		t.Errorf("BMT Validation error")
+		return
+	case -2:
+		t.Errorf("BMT leaf count validation error")
+		return
+	case 0:
+		fmt.Println("Build BMT OK")
+	}
+
+	fmt.Println(tree.Root())
+
+	for i := 0; i < count; i++ {
+		p := tree.InclusionProof(i)
+
+		fmt.Println(p)
+
+		ok := r.CheckProof(sha3.NewKeccak256, p, i)
+		if !ok {
+			t.Errorf("proof %d failed", i)
+		}
+	}
+}
+
+func TestBuildBMT2(t *testing.T) {
+
+	// Grab some data to make the tree out of, and partition
+	data, err := ioutil.ReadFile("binarymerkle_test.go") // assume testdata exists
+	if err != nil {
+		fmt.Println(err)
+		return
+	}
+
+	fmt.Println(len(data))
+	blocks := splitData(data, 32)
+
+	count := len(blocks)
+
+	//	t.Errorf("GetCount() != %d (was )", count)
+
+	tree := Build(blocks)
+	err1 := tree.Validate()
+	if err1 != nil {
+		t.Errorf("%s", err1)
+	}
+	if tree.Count() != uint64(count) {
+		t.Errorf("GetCount() != %d (was %d)", count, tree.Count())
+	}
+
+	r := Root{uint64(count), tree.Root()}
+
+	fmt.Println(tree.Root())
+
+	for i := 0; i < count; i++ {
+		p := tree.InclusionProof(i)
+
+		fmt.Println(p)
+
+		ok := r.CheckProof(sha3.NewKeccak256, p, i)
+		if !ok {
+			t.Errorf("proof %d failed", i)
+		}
+	}
+	//t.Errorf("proof ok")
+	// TODO: check wrong proofs fail
+
+}