Soul Edge
Soul Edge was created by human hands. At first it was just an ordinary sword, but after being bathed in blood and hatred countless times, the sword turned into a demonic weapon and gained a wicked soul called Inferno. Those without strong wills are unable to escape the curse of its evil powers. While it burns fiercely with the regret of lost souls, its blade shines with an icy gleam.
The first known bearer of Soul Edge was a king, whose strong will conquered the malign intelligence of the blade. However, his son was not so strong, and quickly fell under the influence ofInferno. Jealous of his father's power, he stole Soul Edge and instantly came under the possession of the evil sword. In a desperate battle against the deranged prince, the mighty king defeated Soul Edge, but at the cost of his son's life. Swearing vengeance against the cursed blade, which was now nowhere to be found, he forged the holy sword Soul Calibur (see below).
The second known bearer of Soul Edge was Zasalamel. As part of one of his attempts to break the curse of his eternal reincarnations, Zasalamel obtained the cursed blade, but instead his soul was possessed by the evil will of the blade and he turned into the host of the blade until the end of his life.
Several hundred years later, Soul Edge mysteriously appeared once again in a secret auction. While it was unknown why it now existed as two blades instead of one, the evil spirit of the sword could not be mistaken. The swords were obtained by an English curio dealer. But on the way back, his ship was attacked by the dreaded pirate Cervantes and he got ahold of the wicked swords. Possessed by its will, Cervantes went on a murderous rampage, the souls of those he slew feeding the cursed blade.
Many years later, Cervantes was attacked by Sophitia Alexandra, the daughter of a greek baker and blessed by Hephaestus. She managed to destroy the smaller of the two blades, sending its shattered pieces across the world. Cervantes himself was killed by a demon huntress named Takii, who helped the terribly wounded Sophitia home.
It was at that point that Siegfried Schtauffen, a young German knight, arrived seeking the legendary Soul Edge. Trying to restore its delicate state, the blade possessed the dead body of Cervantes and burnt it down. Inferno stood in front of Siegfried, decided to take his soul, but it was ultimately defeated. While it flowed back into Soul Edge, the mad Siegfried took the evil sword for his own. Unable to contain its power, evil energy flowed out of Siegfried and all over the world, creating a phenomena known as the Evil Seed.
Soul Edge now had a bearer worthy of its taint - Nightmare. Completely consumed by the sword, Siegfried went on insane killing sprees, murdering without distinction to feed the evil blade. By absorbing souls and gathering fragments of Soul Edge, the cracks in the blade began to heal. It was almost complete when two brave souls, Kilik and Chai Xianghua stormed Ostrheinsburg Castle. After a vicious battle, Nightmare lay defeated, and Xianghua used Soul Calibur to shatter Soul Edge. But the power of the blade was not so easily dispelled - taking Soul Calibur, Inferno escaped into a dark abyss of its own creation.
Siegfried was himself again, but the effects Soul Edge had left on him were strong. Every time he slept, Siegfried would awake to the corpses of those he had slain in the night. Gradually he slipped into Nightmare once again, and began reforging Soul Edge. After succeeding in restoring many of the sword's original powers, Nightmare was challenged by a swordsman searching for the legendary blade, Raphael Sorel. Their battle was intense, but Nightmare stood victorious in the end. With his last strength, Raphael made a desperate attack, and managed to strike his sword into the very center of the cursed blade. Screaming in agony, Nightmare fell back, and within his mind Siegfried reawoke. After a fierce mental struggle, Siegfried regained his mind. Suddenly, shining from the core of Soul Edge, the holy sword Soul Calibur appeared to him, released from its entrapment within the evil blade. Taking Soul Calibur, Siegfried drove it into its eternal enemy, piercing the eye and silencing the power of Soul Edge. However, it was not enough to destroy the cursed sword, and now both blades lay locked in an embrace, seemingly annulled of all power.
Inferno, thrust out of Soul Edge by Soul Calibur, transferred itself into the remnants Nightmare's armor, but could not manipulate the bodiless husk. It is then that a strange man named Zasalamel appeared. Agreeing to help Inferno if it assisted him in finding the two swords of legends, Zasalamel used his ancient powers to bind it to the armor. Even though the new Nightmare no longer holds Soul Edge, the evil energy from the demonic sword was imprinted on his armor and took on a physical form. Thus the Phantom Soul Edge was born. Its power is dwarfed by the real cursed sword, but as Nightmare once again begins his quest to search for his missing blade, this Soul Edge begins to grow stronger. The real Soul Edge is now in the possession of Siegfried Schtauffen, who is seeking a way to seal the evil sword forever.
Yet, with many of its fragments still scattered throughout the world, Soul Edge's influence expands far beyond the sword itself. Notably, Cervantes de Leon carries a female version of the cursed sword, born from fusing several fragments together. Even though the sword was sealed, its fragments still emit the evil energies of the cursed blade.
Soul Calibur
Soul Calibur is the spirit sword created to combat Soul Edge. A king that once wielded Soul Edge and lost his son because of the demonic sword vowed to create a holy sword from the purified shards of Soul Edge that would oppose the demon sword, being its equal in strength and opposite in intent. The king enlisted the help of the greatest sage in the land, who used purified fragments of the cursed sword to forge Soul Calibur. After many failed attempts, the holy sword was born. The king died after the creation of Soul Calibur, but the sword was protected until the day Soul Edge returned by a sect of guardians created to carry out the late king's will. The guardians lived in seclusion, passing the sword from generation to generation in secret. Whenever a warrior vowed to take on Soul Edge on his own, Soul Calibur appeared to prevent the cursed sword from causing any more damage. Soul Calibur finally appeared, in disguise, as one of the Ling-Sheng Su Temple treasures, a sword called Krita-Yuga. The other treasures, Kali-Yuga and Dvapara-Yuga, are linked to the holy sword. Kali-Yuga, a holy staff, is capable of absorbing different energies to help keep the purity of Soul Calibur. Dvapara-Yuga, the holy mirror of the Ling-Sheng Su Temple, has the power of purifying the corruption of Soul Edge.
Krita-Yuga had been stolen from the temple by one of the monks, Kong Xiuquiang, and handed to his lover Chai Xiangfei, the mother of Chai Xianghua. She will inherit the battered sword, unaware of its original form. Eventually she, alongside Kilik, fights with Nightmare at Ostrheinsburg Castle, and uses the holy blade to shatter Soul Edge. However, Inferno, the evil will of the blade, takes Soul Calibur and plunges with it into an abyss of its own making.
Soul Calibur is not seen of again until much later, when Nightmare has almost completed Soul Edge. When Siegfried Schtauffen regains sanity, Soul Calibur appears from where it was trapped within the cursed blade, and Siegfried drives it into the core of Soul Edge. Now both blades are silent, seemingly powerless, locked in a fateful embrace (see below).
Soul Calibur (tainted)
The Evil Soul Calibur is created when the sword of light is lost in the abyss of chaos created by Soul Edge. Surrounded and consumed with the ambience of evil from the Soul Edge and Inferno's flames, the Soul Calibur eventually succumbs to the darkness and bonds with Inferno. However, when Raphael Sorel pierced the eye of Soul Edge during his battle with Nightmare, it was weakened considerably. Soul Calibur was freed from the darkness and so was Siegfried.
Its Soul Calibur II Weapon Gallery description states that this form of Soul Calibur contains great power, but it is incredibly unstable.
Soul Embrace
Shortly after Siegfried Schtauffen's mind was freed from the grasp of Soul Edge, he set both swords silent when he struck Soul Edge with the sacred sword, Soul Calibur. He currently holds it, but does not use it, preferring to use his sword since Soul Calibur, Requiem. Zasalamel uses its power to achieve his death, but it could have (or possibly has) created Night Terror, because Soul Calibur was made from a purified fragment of Soul Edge, and as such, wields the complete Soul Edge.
Note that officially "Soul Embrace" is the name of the current state of both swords, not a new weapon. "Soul Embrace" is also the name of the artwork, and story-wise this state was known as "Embrace of Souls".
It can be theorized that Soul Embrace (being the complete Soul Edge) can return Soul Edge to its former self when it was truly complete, since Soul Calibur can be tainted. But something worth mentioning is that the Soul Embrace is actually not truly complete, since there exists many fragments in the world (including the living Charade and Astaroth), and even another blade (Cervantes de Leon's Female Soul Edge).