Is there a strictly defined term for validation and verification or are they interchangeable?
Are validations strictly used for transactions e.g. validate a transaction?
Is verification strictly used for on-chain e.g. verification-key-file ?
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Being that this whole space is still very young, there is a serious lack of standards in many areas, including and especially semantics. Depending on context, validation and verification can have a few meanings:
Typically, when one is talking about a non-technical aspect of the ecosystem, the terms are interchangeable. For example, It'd make sense to say that I can verify that Alice sent ADA to Bob (provided I know their addresses). In this instance, saying "validate" instead of "verify" makes sense and is appropriate. In other words, the terms are interchangeable when we use them to describe things.
On the other hand, words are sometimes used as technical concepts that refer to very specific things, in which case they are not interchangeable. For example, a validator script is a technical concept in Cardano's smart contract model; it refers to the part of a smart contract that is executed as on-chain code, used to verify that certain input(s) are valid according the smart contract's intended specification. (Notice how I just used "verify" in a non-technical, dictionary-like manner).
More generally speaking, the term validator is often also used to refer to entities that produce blocks, or participate in on-chain computation (this is non-specific to Cardano). In PoW such entities are often referred to as "miners" and in PoS they are referred to as validators. An SPO such as myself would be considered a validator.
TLDR: strict definitions are hard to come by in emerging and rapidly developing technologies. In this specific case, there is some overlap between interchangeable and non-interchangeable uses of those two words.