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Chisel and plane sharpening
Many who have worked with power tools just buy carbide tipped blades and throw them away when they can no longer force it to cut any longer. While that might not be the best strategy with power tools, it is completely unworkableable with hand tools. Being able to produce keen edges ground at the proper angles is essential to woodworking happiness.
Things to consider
For hand tools, there are several things that must be taken into account for the woodworker to have a satisfactory experience and to produce satisfactory work. First of all, he must have quality tools that have quality steel cutters. Carbide is not used in hand tools since it doesn't hold a sharp edge like steel can. A poor quality steel may be made to hold a decent edge, but will quickly dull. Even quality steel can be damaged by heat buildup from mechanical grinding processes (like your $39.99 grinder from the local home store). Generally, even those can be salvaged by grinding back the edge a bit more past the steel edge that got too hot.
Second, the tool must be a quality tool and be in good condition and (for many tools) properly adjusted and tuned. You should get it through your head from the beginning that you local big box home store won't likely be selling the kind of tools that dedicated hand tool users are looking for. Tools can be old, but they must be well made. In fact, there are many wood workers using hand tools that are over 100 years old who intend to pass these same tools on to their children and grandchildren!
Third, the process of sharpening is something of an art that has to be learned. There is no single right process to getting a super edge that you can shave with. There are people who can produce decent edges with processes that many would regard as inferior and others who can't produce sharp edges on the best of equipment. The fact remains though that if you are going to get quality edges, you need some sort of stones or sharpening equipment.
The three stages
There are three stages to the sharpening process. The first is grinding. On tools that haven't been damaged, or need some serious work, you can skip this step. However, if you need to change the angle of a tool or take out a nick or otherwise remove some serious material, you will want to use a rough stone such as a 250 grit waterstone or a rough diamond stone, or another method that allows you to remove a lot of material quickly.
The second stage of sharpening, honing, is where you will spend most of your time. In fact, for many wood workers, this is the only step that they need for day to day work. Honing involves using something like a 1,000 grit waterstone and then jumping to a 4,000 grit waterstone and even up to an 8,000 grit waterstone. Ceramic, arkansas oil stones, sandpaper, and other techniques can also work for this stage and each have their advantages and disadvantages.
The third stage of sharpening is polishing. For most of us, this really isn't necessary. Basically, it involves a few light passes with the finest stone or abrasive you can get, like the 8,000 grit waterstone and then a bit of work on a leather strop with some rubbing compound. If you are doing very fine work such as hand carving, this might be useful. For general work, unless you are a certified perfectionist, it probably isn't necessary although it can't do any harm.
Sharpening methods
Scary sharp
This is a poor man's method. At least the start up costs are lower. Scary sharp is a technique that seems to have been around about as long as abrasive paper has been produced in fine grades. Basically, the idea is that you stick about half a dozen or so different grits of sandpaper on a piece of plate glass or granite and using a bit of oil or water on the paper, work your way from the rougher grits to the finer ones.
Some people don't care much for this method since it can use quite a bit of sandpaper, but it does produce sharp edges.
Japanese waterstones
Stones like the Norton waterstones seem to be one of the favorites of many hand woodworkers. They take up little space, cut fast, and produce sharp edges. The two disadvantages are that you do have to use water and have to be careful not to get oil on them (remember that old saying about oil and water not mixing), and also they wear fairly rapidly (they are constantly exposing new surfaces to cut, which is why they can cut so quickly), which means they need to be flattened regularly. This can be accomplished fairly easily with a stone designed for the purpose, a rough diamond stone, rubbing two stones of the same grit together or using a fine drywall screen on a flat surface.
Arkansas oil stones
These stones have the advantage of using oil so that you don't have to have water around your tools. They can also produce fine edges. They wear more slowly than waterstones which means they last longer, cut more slowly, and don't loose their flatness as quickly.
Ceramic
Ceramic stones can produce a fine edge without using any lubricant. However, they cut slower than other stones. Generally they are used for fine tools like carving tools that might easily wear a groove in a softer stone.
Diamond stones
Diamond stones have the distinct advantage of being flat and retaining their flatness throughout the life of the stone. They can be lubricated with water and will produce a good edge. There is nothing "wrong" with using quality diamond stones, but waterstones are usually preferred since they cut faster and can more easily produce a superfine edge.
Getting started
First of all, note that this article only deals with sharpening blades such as those used for chisels and planes. Saw sharpening is a different art and involves the use of files.
You will need a to use a process similar to what we have outlined about. A good way to start might be the Norton Waterstone starter kit. Also, you will need some handholding. If you can't find a mentor, I would suggest getting a good book such as The Complete Guide to Sharpening
. Alternatively, you could do a lot of reading on various websites.
Please feel free to comment and I may add your suggestions into the text of this article.