The Bloodedge Demon is a special entity in Nioh 3 that can spawn randomly, with its strength appearing to depend on how many malevolent spirits (red phantoms) you have slain during your journey so far ...
In Wuchang: Fallen Feathers, you have to quell your inner madness if you want more items, upgrade your Maddening Incense, and even enhance your Tempering ability. To quell your madness, you don't need ...
Instead, you need to track down and defeat your various Inner Demons. These nasty foes appear when you least expect them, attacking you while you are down, and not giving you a chance to recover.