There are several theories as to the origin of the Challenge Coin. One datest back to WW I, where a US Army Lieutenant gave each member of his unit a medallion as a memento. Legend has it that he was saved after his plane was shot down over Germany and he was captured by a German patrol, who took all of his identification, except for his Challenge Coin. He escaped to France, and the only reason the French soldiers let him escape to safety was the fact that he had a Challenge Coin. He was, in fact “bona fide” and verified his identity.
Others think the origin of the Challenge Coin is more recent, dating back to the Vietnam War, when an Army infantry-run bar tried to keep non-infantrymen away by forcing “outsiders” to buy drinks for the whole bar if they couldn’t prove they had been in combat, and the Challenge Coin became the accepted form of proof.
Members of the US military have a long-standing tradition of carrying Challenge Coins. With bonds forged in battle, these custom coins — each bearing their own revered symbols and mottos — capture the essence of their affiliation and their fierce price.
Today, Challenge Coins are carried by soldiers, sailors, airmen, Marines as well as lawmen and firefighters. They identify the person as being part of an elite unite with a well-defined history and mission.
The “Challenge” part of the Challenge Coin is a tradition to ensure that members are carrying their unit’s coin. The challenge can be made at any time, with the challenger slapping the coin on the table or bar. Everyone being challenged must immediately produce the coin for their organization: anyone failing to do that must buy a round of drinks for the challenger and everyone else who has a challenge coin. However, if everyone produces a challenge coin, it is up to the challenger to buy a round of drinks for those in possession of one.