According to one story, challenge coins originated during World War I. American volunteers from all parts of the country filled the newly formed flying squadrons throughout Europe. Some were wealthy scions attending colleges such as Yale and Harvard who quit in mid-term to join the war. In one squadron, a wealthy lieutenant ordered medallions struck in solid bronze and presented them to members of his unit. One young pilot placed the medallion in a small leather pouch that he wore about his neck. Shortly after acquiring the medallion, the pilots’ aircraft was severely damaged by ground fire. He was forced to land behind enemy lines and was immediately captured by a German patrol. In order to discourage his escape, the Germans took all of his personal identification except for the small leather pouch around his neck. In the meantime, he was taken to a small French town near the front. Taking advantage of a bombardment that night, he escaped. However, he was without personal identification. He succeeded in avoiding German patrols by donning civilian attire and reached the front lines. With great difficulty, he crossed no-man's land. Eventually, he stumbled onto a French outpost. Unfortunately, saboteurs had plagued the French in the sector. They sometimes masqueraded as civilians and wore civilian clothes. Not recognizing the young pilot's American accent, the French thought him to be a saboteur and made ready to execute him. He had no identification to prove his allegiance, but he did have his leather pouch containing the medallion. He showed the medallion to his would-be executioners and one of his French captors recognized the squadron insignia on the medallion. They delayed his execution long enough for him to confirm his identity. Instead of shooting him they gave him a bottle of wine. Back at his squadron, it became tradition to ensure that all members carried their medallion (or coin) at all times.

This was accomplished through “challenge’s” in the following manner - a challenger would ask to see the medallion. If the challenged could not produce a medallion, they were required to buy a drink of choice for the member who challenged them. If the challenged member produced a medallion, then the challenging member was required to pay for the drink. This tradition continued on throughout the war and for many years after the war while surviving members of the squadron were still alive.

The intent of the initial challenge was to prove membership in a particular unit by producing the unit coin. That was followed by the addition of the requirement to "buy a round" if a member of the unit didn't have a coin. Buying a round isn't the only challenge these days. Sometimes drinking is frowned on, so the challenge can be anything. If you don't have your coin, you have to perform the wagered action.

Challenge coins again became popular during the Vietnam War when the "challenge-response" was added to the tradition. Leisure time in Vietnam was a commodity, but when it came, it was utilized to the max; catching up on sleep; writing letters home; letting off steam at the unit/base bar. The latter provided to be most popular, but eventually it too could become boring and mundane. To heighten excitement and foster unit esprit de corps,
Bullet Clubs were formed. These were comprised of small, elite, front-line fighters who each carried a personalized bullet from the weapons they carried in combat. The ultimate use of the bullet, usually carried in a hip pocket, was to deny the enemy personal capture. When an individual entered the unit/base bar, he would be challenged by other patrons to produce his bullet. If he did, the challenger would buy him a round. If he failed to produce his bullet, he bought a drink for person who challenged him.

Eventually, personalized bullets took on disbelieving proportions. Some "teamies" took to carrying 20-, 40-, or 105-mm cannon shells. Clearly, these were not personalized coup de grace munitions but rather manifestations of perceived individual prowess in combat or - perhaps - on R & R. At the height of the Bullet Club's heyday, it was not an uncommon sight to see strewn across a barroom table a very respectful representation of the full range of bullets, rockets, cannon and artillery shells used in Southeast Asia. In order to gain control of the situation - and to avoid accidental discharge of the large, fully functional munitions - bullets were traded for coins which reflected the unit's symbol and pride.

"Coining" is a relatively new U.S. military tradition, but has roots in the Roman Empire, where coins were presented to reward achievements. Coins come in a variety of shapes, sizes, designs or formats. The oldest coin currently known of was stamped out of copper in the early 1950’s by Col. ‘Buffalo’ Bill Quinn of the 17th Infantry Brigade during the Korean War.

The ‘Rules Of Coining’ have remained basically the same, although today they are greatly expanded. Loss of one's coin was and remains tantamount to eternal disgrace and harassment.

1. Challenge coin rules only apply to individuals who would be expected to have a challenge coin and only a coin holder may "challenge" other individuals who should have a coin.

2. A challenge is made by withdrawing your coin and raising it in the air or by tapping it on a bar or table. The individual or individuals who are challenged are required to produce their coin within 60 seconds. If the individual produces the coin, the challenger is obligated to buy them a drink. If the challenged individual(s) fails to produce the coin, they are obligated to buy the drinks. The reward does NOT have to be an alcoholic
beverage. It can be a soda or any other reward.

3. If a coin is dropped and it hits the floor, the owner is obligated to buy drinks for anyone who hears or sees the coin hit the floor (provided they have their coin on them).

4. Rules of the coin game must be given or explained to all new coin holders.

5. The coin MUST be carried at all times. You can be challenged for it anywhere, at any time. You must produce the coin within 60 seconds without taking more than 4 steps to produce it. 

6. Failure to produce a coin, for whatever reason, means you lost the challenge (whatever the challenger stated. This type of transaction could be expensive, so hold onto your coin. Once the offender (coinless challenge) has bought the drink or round, they can't be challenged again unless they have had an opportunity to regain possession of a coin.

7. If all that are challenged produce their coins, the challenger loses and must buy the drinks for all respondents. This too can be expensive, so challenge wisely.

8. Under no circumstances should a coin be handed to another person unless you are presenting the coin to that person. If a person hands a coin to another, that person can now keep the coin -- it's theirs!!! However, if a person places the coin down and another person picks it up to examine it, that is not considered giving and the examiner is honor-bound to place the coin back where they got it.

9. If a coin is lost, replacement is up to the individual. A new coin should be acquired at the earliest opportunity -- losing a coin and not replacing it doesn't relieve a member of his or her responsibilities. This is especially true if your fellow Coin Holders know that you traditionally carry a coin. 

10. The coin should be controlled at all times. Giving a coin to just anyone is like opening a fraternity to just anyone. It is an honor to be given a coin, let's keep it that way.

11. A given or awarded coin is of more personal value than a purchased coin. If you present your coin to a deserving person, you cannot be challenged until you have had an opportunity to acquire another coin.

12. No holes may be drilled in a coin.

13. Coins are coins, if they are attached to a belt buckle they are considered "belt buckles." Coins on key chains are considered "key chains." Coins can be placed in a "holder or clasp" and worn around the neck or be carried in a wallet or purse to protect it.

14. Carrying the coin of another unit or organization honors that unit. Any Coin from another unit you present when challenged must be accepted by the challenger. It does not matter if you bought the coin or if it was presented to you.

These rules apply to anyone who is worthy enough to be given or awarded a coin, has a purchased coin, or who is
otherwise known to be a coin holder.