Obsidian is composed of essentially the same minerals as granite and rhyolite, but the almost total absence of large mineral crystals gives it the unique 'glassy' look. All are formed when silica rich magma cools to form rock. Granite cools slowly, far beneath the earth's surface, allowing lots of time for large mineral crystals to form. Rhyolite cools faster, on the earth's surface, and smaller crystals are formed. Sometimes as the rhyolitic magma appproaches the surface and the pressure decreases, the water in the magma is released as steam. This results in a thick, pasty, silica rich magma known as obsidian magma. This magma is so thick that crystals are unable to form as the cooling process commences.
Obsidian magma, when it is on the surface, flows extremely slow. It is very viscous, and consecutive flows rarely mix with previous flows. This accounts for the streaking and banding found in many obsidians. The chemical composition changes slightly with each flow, and thus, the obsidian is colored differently. Other colorations occur because of chemical impurities in the magma. Red or brown obsidian indicates the presence of hematite or limonite (iron oxide). Black obsidian results from microscopic crystals of minerals like magnetite, hornblende, pyroxene, plagioclase and biotite present in the magma, and microscopic crystals of various types of feldspars may yield the unique blue, green, purple or bronze colors associated with rainbow obsidian. Very small inclusions of water vapor in the form of bubbles often are trapped in the glass. Tiny gas bubbles that have been stretched nearly flat along the flow layers in obsidian generally cause the reflectance of gold sheen and silver sheen obsidian.
Native Americans found almost all of the obsidian locations in North America and used the glass for making arrowheads, knives, and other tools. There was an active trade going on in obsidian. The fact that each obsidian source area has a unique assemblage of trace elements has helped archeologists determine trade routes.