You gave the answer. There is damage around where the 7 should be. Any coin struck from a die with only 18 8 would have perfectly smooth fields at that point because the number wouldn't have been punched in. It is also highly unlikely that such a coin would have entered circulation, not impossible, but very unlikely. You would expect it to be EF or better, or alternatively lower grade in appearance on account of having been lightly struck, not from wear.