Just to clarify:
Damascus steel and damascus steel (note capitalization!) are two different process. The ancient Damascus steel was a method of producing true, homogenous steel (a form of crucible steel, if I recall rightly) that could be etched to produce a watered pattern, whereas "damascus" is layered of iron/steel(s) of different composition to produce an effect not unlike that of true Damascus steel, hence the name.
We are talking of the latter process.