Suzanne Hutchison, 31, asked 75-year-old Nancy Frizelle for change of 1 before trying to grab her bag in the incident on Craigleith Road earlier this year.
Fiscal depute Ian Wallace told Edinburgh Sheriff Court that Hutchison demanded that Ms Frizelle hand over her purse and then attempted to grab it.
He said: "There was then a struggle and Ms Frizelle tried to push the accused away but she noticed the accused had a knife in her hands. The struggle continued with the accused still trying to get the purse."
Passers-by saw what happened and were able to intervene. Mr Wallace told the court that Ms Frizelle realised she was bleeding heavily from her head. She was left needing stitches to her head and also had an injury to her arm.
Hutchison, of Cornton Vale, admitted carrying out the attack on February 15 this year.