History of the Challenge Coin by 99 Percent Invisible
The United States Military is not known for being touchy-feely. There’s not much hugging or head-patting, and superiors don’t always have the authority to offer a serviceman a raise or promotion.
When a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard wants to show appreciation, love, sympathy, or professional connection, they can use challenge coins.
You can read the entire article on 99 Percent Invisible’s Website