Challenge coins are a long standing military tradition. Challenge coins are carried to signify membership to a branch, unit, or other group and are also often used as awards for graduation or outstanding service. Members of a group carry their challenge coin to show that they belong to that group.
Challenge coins are also popular to bring to the bar. The challenger will lay their challenge coin on the bar or table. Everyone else must display their own challenge coin. Whoever doesn't have a challenge coin must pay for drinks! If everyone has a challenge coin, the challenger must buy.
No one is quite sure when the tradition of challenge coins began. Some say it was started in World War II in the US Army Air Corps although most agree that the usage of challenge coins took off during the Vietnam War, particularly with Special Operations units.