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During World War I, the tradition of military challenge coins is said to have originated with a young American pilot in a volunteer squadron. According to legend, a wealthy lieutenant had bronze medallions struck with the squadron’s insignia and gave them to his fellow pilots as a symbol of camaraderie. One pilot, carrying his coin in a leather pouch, was shot down over German territory and captured. Stripped of all identification except the coin, he later escaped, and when confronted by French allies who suspected him of being a spy, he presented the medallion to prove his identity, sparing his life.

The coin’s significance grew as it became a symbol of unit pride and belonging. After the incident, squadron members began carrying their coins at all times, and a tradition emerged where pilots would challenge each other to produce their coin. Failure to present it often meant buying a round of drinks or facing other lighthearted penalties. This practice reinforced bonds among service members, turning the coin into a tangible reminder of shared sacrifice and loyalty in the chaos of war.

While the story’s details are debated, it highlights the challenge coin’s role as a morale-boosting tradition. By the end of World War I, the practice spread beyond the squadron, with coins becoming a way to honor service, mark special missions, or recognize leadership. The tradition persists today, with coins exchanged among military members as tokens of respect, gratitude, or membership in an elite group, rooted in that early tale of survival and identity.