The Extremely Low-Resource Optical Identifier (ELROI) is a concept for an autonomous, low-power optical "license plate" that can be attached to anything that goes into space. ELROI uses short, omnidirectional flashes of laser light to encode a unique ID number which can be read by a small ground telescope using a photoncounting sensor and innovative extreme background-rejection techniques. ELROI is smaller and lighter than a typical radio beacon, low-power enough to run on its own small solar cell, and can safely operate for the entire orbital lifetime of a satellite or debris object. The concept has been validated in ground tests, and orbital prototypes are scheduled for launch in 2018 and beyond. In this paper we focus on the details of the encoding scheme and data analysis that allow a milliwatt optical signal to be read from orbit. We describe the techniques of extreme background-rejection needed to achieve this, including spectral and temporal filtering, and discuss the requirements for an error-correcting code to encode the ID number. Worked examples with both simulated and experimental (ground test) data will illustrate the methods used. We present these techniques to describe a new photon-counting optical communication concept, and to encourage others to consider observing upcoming test flights. a) rmholmes@lanl.gov; ISR-1, Space Science & Applications b) palmer@lanl.gov; ISR-2, Space & Remote Sensing decoding with prior information, as implemented in (for example) turbo codes, LDPC codes, and, recently, polar codes 19-21 . These types of ECC codes are frequently used in modern digital communications, including space communications, and have known optimal decoding techniques.FUNDING