The type of steel used affects strength, toughness, flexibility and how well the blade takes and keeps an edge. While some steels are better for all around use than others, any good quality knife from a reputable manufacturer or maker will use a steel up to most survival tasks. Still, better steels will usually hold their edge longer and are stronger and this can be a significant advantage. Generally, with normal production quality knives, the more expensive knives use better steel with the 440 series of steels being the standard for better quality, but relatively inexpensive, stainless steel production knives.
Higher end production, bench made and custom knives generally use higher grade steel, D2 and ATS-34 are two of the most popular, BG-42 was "the" premium stainless steel for a while recently, but now the choices are 154 CM and CPM S30V, the latter the hottest and best performing stainless steel currently available. However, there is a plethora of others used, all with their champions. Some makers use exotic alloys of titanium or laminated steel in an effort to give them an "edge," but there are very few truly unique steels available. Most are simply variations on the old standards which are well proven or simply trade names used for marketing effect. These better quality steels are used, by and large, because they hold an edge better and are stronger, less likely to break if abused. These are distinct and important advantages that could prove critical in a survival situation, but they don't come cheap.
NOTE: For a fairly comprehensive breakdown of the most common alloys used in knives, try A.G. Russell's Knifemaker's Steel Chart.
Note also that it isn't just the type of steel that is important, but how it is treated counts a great deal. The best steel, improperly heat treated and tempered may well be worse than a lesser quality steel properly prepared.
The biggest question is often whether to get a stainless steel or carbon steel knife. It is worth noting that "stainless" does not mean "rust-proof," just rust resistant, to varying degrees. Stainless, especially the "better" grades with a high carbon content, will still oxidize and can deteriorate in a wet environment, if not looked after properly. However, stainless steel is a must in the marine salt water environment or anywhere you will have to deal with constant wetness. (Titanium alloys are another option for use in wet conditions or in seawater environments. However, for now, it has many drawbacks for general all purpose use) Elsewhere, either will do, but stainless does require less care and concern, albeit at generally somewhat higher initial expense for production knives and some tendency in some alloys to be a bit more difficult to sharpen. In addition, less expensive stainless steel alloys with lower carbon content will not hold an edge nearly as well as a high carbon stainless or a high quality non-stainless steel blade. That can be important and is the best reason to invest in a knife with high quality steel with a high carbon content.
The difference in ease of sharpening, however, isn't great enough to really be an important issue. Any diamond, carbide or ceramic sharpener will make quick work of any of these edges. It might make a difference if you have to use a natural stone to sharpen the knife in the field, but you wouldn't be caught dead out there without your knife sharpener, would you?
Despite old wives' tales to the contrary, the best production quality stainless steels are virtually as good, for all practical matters, as most quality production grade carbon steel, as far as an edge is concerned. Only when you get into the top of the line production and the bench made and custom knife category do you see the more exotic steels and alloys which make a quantifiable difference either way.
A carbon steel blade will take some extra care to prevent rust and this is most important in storage, if the blade isn't used regularly, such as in a survival kit. Many plain steel blades are coated in order to reduce the propensity to rust, but the edge will still be exposed to oxidation and must be protected. Some non-stainless steels, such as D2, are more resistant to corrosion than others, but all will rust eventually, given the chance. If you are going to put a non-stainless steel blade in a kit for long term storage, be sure to treat the blade with a long term preservative and, preferably, vacuum pack it so it cannot come in contact with moisture.
An excellent product I've found for blade care is Sentry Solutions Tuf-Glide and Tuf-Cloth. They also make a Marine Tuf-Cloth for very harsh environments. I'd recommend this treatment for any knife blade, not just plain carbon steel, but also better quality high carbon stainless. The cloth makes it convenient for field use. Another similar product that I've had good results with is Militec's Militec-1.
As a practical matter, stainless steel may be the best choice for most. In the end, it is really more a matter of personal preference, of the knife maker and buyer. The bottom line is that there are advantages to spending more for a knife made with better quality steel, be it carbon or stainless.
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