Obsidian

Obsidian is made when water and lava collide. It is used in the production of Obsidian Skull, Obsidian Brick, and Hellstone Bars. As of the current version obsidian is also immune to bomb explosions, but not to Dynamite explosions. The easiest way to collect obsidian is to lead a lot of water into a lava pool and mine underwater. If you are struggling to find a good lava pool or water near one you could always dig a large amount of water to the Hell biome to get loads of easy obsidian