When someone starts talking about these challenge coins from the military, at least in modern times, they’re not talking about a recognized currency in most cases but a specially minted, designed, or crafted coin/medallion that is created with a well recognized symbol, insignia, or emblem of a popular unit or organization. The challenge coin history may have started out as an honorary token for going above and beyond the call of duty back in ancient times, today they are mostly used as evidence. Having one of these coins is one of the best ways to prove membership.
This not only works as a point of pride and to enhance both morale and unity among a special group or unit but they also work to prove membership against a challenge and ferret out liars, con men, or pretenders. There are service members who even collect these coins out of extreme respect for what they represent and the units or organizations they represent.