Sword

Swords are weapons that kill mobs or players (if multiplayer PvP is on) more quickly than with bare hands. They also remove several blocks faster than using bare hands (such as leaves, wool, and Soul Sand), but each broken block counts as two uses on the sword's Durability Bar when it is used in this way. Stone (or better) swords revert minecarts in one hit with no decrease in durability, whereas wooden swords require two hits. Killing larger slimes with a sword will also prevent more slimes from spawning. In The Nether you can find Zombie Pigmen that use Golden Swords, but they do not drop their swords when killed.

Crafting
Swords are created with 1 stick and 2 units of a tool material:

The following table summarizes the damage that different quality swords inflict.

The formula to find the total lifetime damage is Durability x Damage per hit = Lifetime damage.

Combat
The sword is a short range weapon - despite its appearance, it grants no range advantage over any other tool as of Beta 1.7, including bare hands. Swords do inflict more damage than bows - often significantly more depending on material, and even a wooden sword deals half a heart more damage than an arrow. A way to use swords without being hit (and thus closing the gap between swords and bows) is to dig a trench such that the player's head is the same level as the mob's feet.The player must of course have blocks over his head so that mobs do not come into the trench. It is then possible to hit mobs without them seeing the player: this prevents mobs from retaliating. This method is efficient when defending a fortified building, but is nearly useless when exploring except against the 2-block wide Spider.

High damage swords are primarily advantageous because they kill mobs in fewer hits, defeating them faster and thereby reducing the chance of being damaged in return. For the same reason, you will swing these swords fewer times in the long run, reducing the rate at which Durability is expended. Unless the player engages in combat very frequently, swords in general will see a far longer useful life than say, a pick or a shovel which may be expended in a few minutes of intensive excavation. This causes diamond swords in particular to last an extremely long time. Some players may find that this weapon can easily outlast them, being lost due to accidental death in lava or otherwise rendered beyond post-mortem retrieval long before it is actually used up. A diamond sword's 5.5 over the iron sword's 4.5 is also a much bigger difference than the difference between the numbers may imply as it guarantees a kill of any aggressive mob (or an unarmoured player) in two hits, and any passive mob in one. The ability to kill rapidly is of greatest benefit against creepers and ghasts when the time to act may be very short. These factors combined make a diamond sword a compelling investment.

As of Beta 1.5, all melee attacks, including hands, do half a heart more damage, making the stone sword arguably nearly as effective as the iron one as it kills most mobs in the same number of hits. If the player combines swordplay with archery, the iron sword's extra damage will save a significant number of arrows and closely matches performance with the diamond sword.

The weaker swords are not recommended for creeper combat (especially on normal or hard) and there are strong arguments for using a bow, owing to its range and despite its ammo expenditure. If you approach a creeper with a sword, a recommended strategy is to use hit-and-run tactics. Hit the creeper and run away until the hissing stops, then run forward and hit it again, as many times as necessary. With a diamond sword, however, one may simply charge at the creeper whilst swinging it, as the 2-hit-kill allows the player to kill the creeper prior to their "fuse" running out. Be wary, as this is a dangerous tactic that requires a bit of practice, and the creeper may move out of the way, often ultimately leading to the demise of the player. Creepers tend to spiral in on their targets in a counterclockwise fashion, so one might find it helpful to remember to move their cursor to the left as the creeper strafes.

Swords will be able to block attacks by holding the right click in the 1.8 update.

Bugs
In 1.8 Pre-relase while holding sword if you double-click the use -button (Right mouse button as default) you will sprint.

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