Just the word makes me smile. Generally speaking, they're a single word that easily distinguishes a person as not belonging to another group because of the way they say it.
It comes from the story in the Bible, in Judges 12, verses 5 & 6. Not a happy story. The Gileadites managed to defeat the Ephraimites in battle. When the refugee Ephraimites tried to cross the Jordan river, they were given the Hebrew word shibboleth to say to prove they were Hebrews. If they couldn't say it correctly (using the SH sound at the beginning), they were killed:
And the Gileadites took the passages of Jordan before the Ephraimites: and it was so, that when those Ephraimites which were escaped said, Let me go over; that the men of Gilead said unto him, Art thou an Ephraimite? If he said, Nay;
Then said they unto him, Say now Shibboleth: and he said Sibboleth: for he could not frame to pronounce it right. Then they took him, and slew him at the passages of Jordan: and there fell at that time of the Ephraimites forty and two thousand.
Because of that story, any word that points out a person as obviously being not part of the group is a shibboleth. But a shibboleth can also be an inside joke or something else as well.
Shibboleths have been used in war many times, just like in the Bible. During WWII, there was a time where U.S. soldiers used the word, lollapalooza as a code word to distinguish Japanese Americans from Japanese spies. If the first two syllables came out with Rs (rorra instead of lolla), they shot the guy without waiting for the rest, knowing he wasn't really American.
In some of my digging, I found out that the Finns (yay, my Finns!) used two specific shibboleths during their nasty war with Russia, a war they by all accounts should have lost (and did have major losses from, but managed to be the only country bordering the Soviet Union that never fell to Soviet rule).
The first shibboleth was the Finnish word for one, or yksi. Contrary to what you'd think, the Finnish Y is a vowel. It doesn't have a typical Y sound like English or most other languages. So if a Russian dressed as a Finn tried to put a ya or some other sound at the beginning, again, they'd shoot the guy, knowing immediately that he was an impostor.
The other shibboleth totally cracked me up, because it was almost too cruel. There is no way anyone but a real Finn or someone who knew the language extremely well could have a prayer of saying this word (I know how it's pronounced, but I'm sure I have an accent):
First off, the Russians don't even have an H. They didn't stand a chance on that count alone.
Then the ö and y vowels are both really tricky. But putting them together into öy? You have got to be kidding me. Learning how to do that literally took me a year. (And I was living in the country and attending public school.)
And then in the second half of the word, you have another y.
The poor Russian (mean killer) spies were dead before they opened their mouths.
What does höyryjyrä mean? It's a totally random word. It just means steamroller. But man, it did the trick. No one but a native could possibly say that right.
Hot dang, talk about the perfect shibboleth!
On a lighter note, a good example of a cultural shibboleth situation is in What the Doctor Ordered, by Sierra St. James (also known as Janette Rallison), where the hero character decides to attend an LDS singles activity and pretend he's LDS.
The woman he's interested in knows full well he can't pull that off, but they make some sort of bet on it. He goes to the activity, and sure enough, he totally flounders. When people start talking about home teaching this and food storage that and buying bulk toilet paper . . . and then expect coherent responses out of him and he can't give them, it's one massive shibboleth.
He gives himself away. It's not long before everyone there knows without a doubt that this guy is not Mormon.
(It's a hysterical scene, by the way. I laughed my head off as this man, a respected and intelligent medical doctor, desperately tries to pretend he's Mormon and fails miserably simply because he's doesn't know the jargon and the culture.)
All of us have shibboleths in our lives, whether it's regional dialects, or family quirks that make it clear we belong to our family, or even inside jokes that crop up among close high school friends that no one else gets. They're some of the things that make life--and language--fun.