Icelandic is spoken by the vast majority of people who live in Iceland (approximately 280,000). Icelandic is rarely used outside Iceland, despite the fact that from the middle of the 19th century until the First World War 15-16,000 Icelanders (about 20% of the population) moved to Canada and the United States. These Icelandic immigrants have many descendants in North America but very few of them speak Icelandic today.
Icelandic began to develop as an independent language soon after the settlement of Iceland, late in the 9th century and early in the 10th century. Most of the settlers came from Norway, primarily West Norway, and some came from the British Isles. Presumably, there was some dialectal variation in the language of the settlers but this levelled out in the first centuries of the settlement. Regional variation in Modern Icelandic is mainly characterised by differences in pronunciation but they are so minor that Icelanders understand each other quite easily, wherever they live. As an example of dialectal variation, many speakers in the northeastern part of Iceland have aspirated stops after a long vowel (e.g. in words like api ape, bátur boat and bak back) but in other parts of the country speakers have unaspirated stops after a long vowel. The near absence of dialects in Icelandic has been attributed to various factors, for example Icelands strong literary tradition. Another possible factor is that the inhabited area of Iceland is almost circular, since it is around the coast of the country. Icelanders travelled between regions, farm workers were often itinerant and fishermen travelled long distances to fishing stations in other parts of the country.
It is a remarkable fact that there have been very few historical changes in the grammar of Icelandic. The difference between written Old and Modern Icelandic is so insignificant that Icelanders today can read Old Icelandic texts (e.g. the Sagas) without difficulty. The main reason for this is that the inflectional system of Old Icelandic has remained virtually unchanged, unlike the inflectional systems of Danish, Swedish and Norwegian, which have become drastically simplified. Syntactically, Old Icelandic differs in some ways from Modern Icelandic, for example with respect to word order, which is less restricted in Old Icelandic than in Modern Icelandic. The pronunciation of the language has changed considerably, but most of the changes had taken root by the 17th century. Examples of phonological changes in Icelandic include the rules of vowel length and u-epenthesis before r in certain consonant clusters (in words like hestur horse and fegur_ beauty, which in Old Icelandic were hestr and fegr_).
The First Grammatical Treatise, which was written around 1150, is an invaluable source of information about the Old Icelandic phonological system. The author is unknown but he has been called the First Grammarian. He described the phonological system with great sophistication and he proposed a new method of standardisation for spelling. One of his aims was to use as few letters as possible, but the Latin alphabet was unsuitable for the Icelandic phonological system, primarily because the vowel system was too complicated. There were only five symbols for vowels in the Latin alphabet but Old Icelandic had nine vowels (which could both be short and long). The acute was used for long vowels in the time of the First Grammarian, but today this diacritic indicates a different sound quality. For example, the letters á and ó represent the diphthongs [au] and [ou] (cf. English loud and boat) whereas the letters a and o represent the monothongs [a] and [o]. The Latin alphabet was appropriate for the Icelandic consonant system, except that symbols for two consonants were missing. These are the sounds represented by _ (thorn) and _ (edh) in Modern Icelandic (spelled th in English, cf. thing and mother).
Many old loan words were assimilated to the Icelandic inflectional system early on. The original settlers brought some words from distant countries, for example torg square (>torgu) from Old Russian and fíll elephant (>fil) from Persian. When Icelanders converted to Christianity in the year 1000, the vocabulary was greatly enriched by loan words, e.g. prestur priest (>préost) and kirkja church (>cirice) from Old English and altari altar (>altari) and djöfull devil (>diabol) from Old Saxon. In the 13th century Icelanders were introduced to chivalric romances and soon they began to translate them into Icelandic and write their own romances. The chivalric romances brought some new words into the language, for example kurteisi courtesy, politeness (>curteisie) from Old French, knapi jockey (>knape) and riddari knight (>ridder) from Middle Low German and lávar_ur lord (>hlaword) from Old English.
Denmark ruled Iceland from around 1400 to 1944, when Iceland gained full independence. During those years Icelandic was greatly influenced by Danish, because Icelanders had little contact with foreign countries other than Denmark until the 19th century. Officials, merchants and others used Danish as a business language, and in the 19th century the upper classes in Reykjavík and Akureyri used Danish rather than Icelandic. During this period some believed that the Icelandic language would soon become extinct. However, this prediction was not borne out because as early as the 17th century, Icelanders started eliminating loan words in a systematic way. The reaction against foreign influence on the Icelandic language gained momentum during the fight for independence in the late 19th century and the beginning of the 20th century. Since the 20th century many new words in different fields have been coined by language committees, scholars and the general public. An example of Icelandic neologism is the international word telephone, which in Icelandic is sími, a word from Old Icelandic that used to mean string or thread. The word computer is tölva in Icelandic, which is derived from the word tala number. Despite the linguistic purism in the 20th century, there are still some Danish loanwords in current use, e.g. akkúrat precisely, edrú sober and fatta grasp, notice (cf. Danish akkurat, ædru and fatte). The British and American occupation of Iceland during the Second World War and increasingly close relations with English-speaking nations have contributed to the predominantly English influence on Icelandic in the 20th century. English loanwords from the Second World War include jeppi jeep and rúta bus (cf. route) and more recent examples include partí party and bissness business. Most new loan words in Icelandic are colloquial; in written language words of Icelandic origin are strongly preferred.
English has also been influenced by Old Norse and Modern Icelandic. English has the Icelandic word geyser (cf. the hot spring Geysir) and many English words derive from Old Norse, for example mire (>Old Norse m_rr), fjord (>Old Norse fjör_r) and reindeer (>hreind_r).