Many organizations and services claim to have been the originators of the challenge coin. However, the most commonly held view is that the tradition began in predecessor of the Air Force; the United States Army Air Corps.
During World War I, American volunteers from all across America filled the ranks of newly formed flying squadrons.
Legend has it that in one particular squadron, a wealthy lieutenant ordered medallions struck in solid bronze and presented them to the men in his unit.
According to stories on several Web sites, one young pilot placed the medallion in a small leather pouch he wore around his neck. Shortly after acquiring the medallions, the pilots' aircraft was severely damaged by ground fire and he was forced to land behind enemy lines. He was immediately captured by a German patrol.
That night, while being held captive in a small occupied French town, he took advantage of an artillery bombardment and escaped. However, he was without personal identification, which had been taken by the Germans.
He succeeded in avoiding German patrols by donning civilian attire and eventually reached the front lines. With great difficulty, he crossed no-man's land and stumbled onto a French outpost.
Previously, saboteurs had plagued the French in the sector. They sometimes masqueraded as civilians. The French, not recognizing the young pilot's American accent, thought him to be a saboteur and planned 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 French captors who recognized the squadron insignia on the medallion. They delayed his execution long enough 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.
Today, many service members proudly display their "coin collections" on a display rack, a show of the many accomplishments and achievements they have earned over the years. Every coin has a story or meaning behind it on either how it was earned.
In some Air Force units when the Airmen's Coin is pulled out at a bar, those airmen not in possession of their coins will be forced to buy the next round of drinks. If all airmen have their coins the person to initially pull out their coin will have to buy the round.