Third-party grading
Third Party Grading (TPG) refers to coin grading, authentication, attribution, and encapsulation by independent certification services. These services will, for a tiered fee, "slab" a coin. Professional Coin Grading Service (PCGS), Numismatic Guaranty Corporation (NGC), Independent Coin Graders (ICG), and ANACS are the most popular and credible services. Together they have certified over 80 million coins. All four firms guarantee the grades and authenticity of their certified coins. Certified Acceptance Corporation (CAC) is a coin certification service which certifies—and makes a market in—certain high-end coins already certified by PCGS or NGC.

History

Modern third-party coin grading service is presently defined by the tamper-resistant plastic "slab," which encapsulates both the coin and its certification.  Before the slab, there was no way to permanently tie the certificate to the actual coin being certified.  It was painfully simple to submit a superior coin for certification and then sell a similar, but inferior, coin with the certificate issued for the more valuable one.  This was the problem faced by what may be the earliest TPG service, the Institute of Numismatic Authenticators, founded by the controversial Walter H. Breen in 1962.  The company lasted little more than a year.

A decade later, the American Numismatic Association (ANA) established their Certification Service, the ANACS, in 1972. At first, the coins were not graded, only confirmed as genuine. Coins were returned with a photo certificate but not encapsulated.
Originally located in Washington DC, the ANACS moved to Colorado Springs in 1976.  The Official American Numismatic Association Grading Standards for United States Coins was published in 1977, providing the basis for ANACS's expansion from authentication only to into grading in March 1979.

The move from photo certificates to slabs came in 1984, with a now defunct company called Accugrade.  Their early slabs are notable for containing both the coin and a photograph of the coin, clearly illustrating the transition from photo certificates to slabs.  PCGS began operations in 1986, providing encapsulation in a modern plastic slab without a photograph.  Their first-generation holder is known as the Old Green Holder (OGH) or "rattler," because of its label color and the fact that coins would rattle inside. NGC commenced business in 1987.  ANACS made the move from photo certificates to slabs in 1989.  ICG was established in 1998.  Many other companies have provided similar services but most are no longer in business and all have certified far fewer coins.  Today, some people have begun collecting some of these early slabs from defunct companies not for the coins, but for the historical value of the slabs themselves.

A more recent development has been the advent of "stickering" services, such as Certified Acceptance Corporation (CAC).  These companies do not slab coins themselves, but rather provide a second opinion on already slabbed coins, adding a sticker to slabs that they consider to be on the high end of their grade.

Leading services

There are four coin certification services which eBay, the largest coin marketplace, deems acceptable to include in its listings: PCGS, NGC, ANACS, and ICG. Experts consider these to be the most credible and popular services. Together they have certified over 80 million coins.

In 2007, the rare coin industry's leading dealer association, the Professional Numismatists Guild (PNG), released the results of a survey of major coin dealers who gave their professional opinions about 11 certification services. PCGS and NGC were rated "Superior" overall, with ANACS and ICG deemed "Good". PCI and SEGS were listed as "Poor", while called "Unacceptable" were Accugrade (ACG), Numistrust Corporation (NTC), Hallmark Coin Grading Service (HCGS), American Coin Club Grading Service (ACCGS), and Star Grading Services (SGS).

NGC and PCGS counterfeit holders have been reported, but significant measures have been taken by both services to remedy the problem, such as NGC's use of photographic verification for every coin certified and both services' employment of serial number verification and anti-counterfeiting features in their holders.

Process
At each of the four main grading companies, a similar process is used. Each coin is graded (on a verbal and numerical scale from 1 to 70) and authenticated by two or more graders, and then assigned a final grade by a finalizer, based in part upon the recommendations of the prior graders. Depending on the company, various descriptors may be added, such as Full Bell Lines (FBL) for Franklin half dollars or Deep Mirror Prooflike (DMPL) for Morgan dollars, and the coin's die variety may be noted. The coin is then slabbed and returned to the customer.

References

Coin grading