According to the legend, Masamune was a well-established swordmaker of the late 13th and early 14th century in Japan. His reputation for making exquisitely useful and effective blades was beyond reproach, except by one other master craftsman, his pupil (according to the story, though in real life they were not contemporaries) named Muramasa. Muramasa decided one day to challenge his master to a swordmaking competition to see who in fact was the better craftsman, since both created blades that were highly sought after. Masamune agreed, and they both went away to spend many weeks and months constructing their greatest sword ever.
When the time came to present them, the men agreed to have their competition judged by the wisest monk in all of Japan. Standing beside a river, the two men decided to take turns lowering their sword into the water, to see how cleanly they would cut things that flowed downstream. Masamune chose to allow his pupil to go first. Muramasa gladly accepted, and proudly drew his sword, which he announced was named 10,000 Cold Nights, for the time he had spent crafting it. Muramasa's sword, to the amazement of all the onlookers, was easily able to cut not only the leaves, fish, and even logs that floated down the stream with ease, but even the water itself seemed to part, and the wind hissed as the blade cut through its passing breeze. Everyone nodded in amazement.
Masamune went second, and announced as he drew his blade that its name was Gentle Hands. Lowering his creation into the water, people again watched with awe as it sliced through leaves and logs, but to everyone's surprise the fish of the river simply swam up to it, touched its blade, and then swam heedlessly around it. Likewise the water did not part for it, and the wind passed gently and calmly over its exposed edge. Upon witnessing this, Masamune's competitor began to laugh and deride him for being the supposed "master" whose blade couldn't cut even half as well as his own.
At this point, their judge stepped forward. The grey, wizened face of the monk looked calmly back and forth between the two men, and then surveyed the crowd with kind amusement before he spoke.
"I'm sure we can all agree that Muramasa has made an excellent blade. Muramasa's blade has cut through leaves, logs, fish, and even the water and the air." Everyone nodded in agreement while Muramasa smirked.
"However," the monk continued, "what I see in his blade is not good, because it is a bloodthirsty blade." He said sternly, "not only does it cut the leaves and logs, but it also cuts the fish, the water, and the air. His blade is indiscriminate, and would be just as comfortable severing heads as it would be chopping down trees." At this, Muramasa became indignant.
"Meanwhile," the monk continued, "Masamune's blade has proved itself as being perfectly capable of cutting the leaves and the logs, yet it allows the fish, the water, and the air to pass harmlessly by it. Although it could easily cut down a grown tree, it restrains itself from killing the smallest fish. His blade knows the value of life. His blade shows discretion." At last, Masamune began to smile.
"Therefore," the monk concluded, "I judge that Masamune's blade is truly the better sword, for though his craft gives him the skill to make a weapon of pure destruction, he has chosen to temper his blade the knowledge of restraint."
From that day onward, both Masamune and Muramasa continued to be known as the two greatest swordsmiths in all of Japan. Yet forever afterwards, it would be Masamune who was remembered as the greatest master in all of Japanese history, for his craft was tempered with wisdom.