Challenge Coins

Imagine you are a king of old, afraid of being assassinated. Your king’s guard tells you that they’ve got you covered, but too many kings have been killed in your area over the last century for you to feel that safe. How can you learn of your actual vulnerability, and of how to cut it?

Yes, you might make prediction markets on if you will be killed, and make such markets conditional on various policy changes, to find out which policies cut your chance of being killed. But in this post I want to explore a different solution.

I suggest that you auction off challenge coins at some set rate, say one a month. Such coins can be resold privately to others, so that you don’t know who holds them. Each coin gives the holder the right to try a mock assassination. If a coin holder can get within X meters of you, with a clear sight of a vulnerable part of you, then they need only raise their coin into the air and shout “Challenge Coin”, and they will be given N gold coins in exchange for that challenge coin, and then set free. And if they are caught where they should not be then they can pay the challenge coin to instead be released from whatever would be the usual punishment for that intrusion. If authorities can find the challenge coin, such as on their person, this trade can be required.

Now for a few subtleties. Your usual staff and people you would ordinarily meet are not eligible to redeem challenge coins. Perhaps you’d also want to limit coin redeemers to people who’d be able to kill someone; perhaps if requested they must kill a cute animal with their bare hands. If a successful challenger can explain well enough how they managed to evade your defenses, then they might get 2N gold coins or more. Coin redeemers may be suspected of being tied to a real assassin, and so they must agree to opening themselves to being investigated in extra depth, and if still deemed suspicious enough they might be banned from ever using a challenge coin again. But they still get their gold coins this time. Some who issue challenge coins might try to hide transmitters in them, but holders could just wrap coins in aluminum foil and dip them in plastic to limit odor emissions. I estimate that challenge coins are legal, and not prohibited by asset or gambling regulations.

This same approach could be used by the TSA to show everyone how hard it is to slip unapproved items past TSA security. Just reveal your coin and your unapproved item right after you exit TSA security. You could also use this approach to convince an audience that your accounting books are clean; anyone with a coin can point to any particular item in your books, and demand an independent investigation of that item, paid for at the coin-issuer’s expense. If the item is found to not be as it should, the coin holder gets the announced prize; otherwise they just lose their coin.

In general, issuing challenge coins is a way to show an audience what rate of detection success (or security failure) results from what level of financial incentives. (The audience will need to see data on the rates of coin sales and successful vs. unsuccessful redemptions.) We presume that the larger the payoff to a successful challenge, the higher the fraction of coins that successfully result in a detection (or security failure).