For 0 bits(empty letter) : 1 possibility
For 1 bit : 0, 1 : 2 possibilities
For 2 bits : 00, 01, 10 : 3 possibilities
For 3 bits : 000, 001, 010, 100, 101 : 5 possibilities
For 4 bits : 8 possibilities
So to generalise, T(n) = T(n-1) + T(n-2) which accounts for O(2^n).