Discover the USMC Challenge Coin

A challenge coin is a small coin or medallion bearing an organization's insignia or emblem and is carried by the organization's members. They are given to prove membership when challenged and to enhance morale.
Origins of the challenge coin
Like so many other aspects of military tradition, the origins of the challenge coin are a matter of much debate with little supporting evidence. While many organizations and services claim to have been the originators of the challenge coin, the most commonly held view is that the tradition began in the United States Army Air Service (a forerunner of the current United States Air Force).
Air warfare was a new phenomenon during World War I, when the army created flying squadrons and manned them with volunteer pilots from every walk of civilian life.

While some of the early pilots came from working class or rural backgrounds, many were wealthy Ivy League students who withdrew from classes in the middle of the year, drawn by the adventure and romance of the new form of warfare.
As the legend goes, one such Ivy Leaguer, a wealthy lieutenant, ordered small, solid-bronze medallions (or coins) struck, which he then presented to the other pilots in his squadron as mementos of their service together. The coin was gold-plated, bore the squadron's insignia, and was quite valuable.

One of the pilots in the squadron, who had never owned anything like the coin, placed it in a leather pouch he wore around his neck for safekeeping.
A short while later, this pilot's aircraft was heavily damaged by ground fire (other sources claim it was an aerial dog fight), forcing him to land behind enemy lines and allowing him to be captured by the Germans. The Germans confiscated the personal belongings from his pockets, but they didn't catch the leather pouch around his neck.

On his way to a permanent prisoner of war facility, he was held overnight in a small German-held French village near the front. During the night, the town was bombarded by the British, creating enough confusion to allow the pilot to escape.