Obsidian

Obsidian is a deep purple block that was first released into that game at version 0.30. Obsidian may be found on rare occasion, when there is flowing Water and still Lava nearby.

Obsidian is available for use in Creative mode. It is generally used for making dark things, or the black lines of pixel art. In Survival Test mode, Obsidian was extremely tough to break and would drop one or two Cobblestone blocks when busted. Obsidian was not available anywhere in Indev. Obsidian is created when flowing water hits a lava spring; when a water spring and a lava spring collide it creates cobblestone. The obsidian never actually spawns with the chunk, but is created by the environment. It takes 50 seconds to destroy with an non-diamond pickaxe and 15 seconds to destroy with a diamond pickaxe. Obsidian can only be successfully mined with a diamond pickaxe. Obsidian can be destroyed by TNT although it will need to take a total of 6000 damage points done by TNT before breaking without dropping anything.

Obsidian in the wild is somewhat rare and difficult to mine since it usually rests on top of a Lava block. Obsidian farming is thus the preferred way to acquire large quantities. A basic Obsidian farm is composed of a trough seven blocks long into which seven blocks of Lava are poured using the Bucket. A water block is then placed on top of one end of the trough so that it flows onto and converts the Lava into Obsidian.

As of the Halloween Update Obsidian can be used to create portals to The Nether. This requires 14 (or 10) blocks of Obsidian and Flint and Steel (fire lighter). Arrange the blocks 4 across and 5 high forming a square ring. Use the Flint and Steel to create fire in the middle of the ring and a portal is  formed. Step into this port and wait to be teleported to The Nether. You can use only 10 blocks, not adding the corners of the frame. While less aesthetically pleasing, it saves about 30% of obsidian resources.

In the first version of Infdev, Obsidian was used to mark the positions of the cardinal directions. This created two intersecting planes extending just above the surface of the solid material that surrounds them. This has since been removed. Since the Halloween Update, Obsidian can be used to create a portal to the Nether.

Notch has mentioned he may require floating islands to have obsidian in the future:

Later, when asked about making floating blocks fall, he answered:

Obsidian