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Iceland was settled in the 9th century by Norse vikings. The first settlement to last was that of Ingolfur Arnarson in Reykjavik. This is where most of the people of Iceland live. Reykjavik has a bustling nightlive, an exciting arts scene, and offers visitors the opportunity to explore the countryside in short trips to areas such as Thingvellir, Gullfoss and Geysir.
If you are interested in nature, Iceland is a great place to visit. In the summer, many companies offer guided bus trips that will take you around the country. You can also take the bus by yourself and go on hikes near places such as Thorsmoerk, Snaefellsjoekull, and more. Another alternative is to ride horseback across the highlands.
Additional Notes: The terrain in Iceland is so rugged due to centuries of volcanic activity, this is where the US tested their lunar landing module that eventually drove on the moon!
Also because of Norse woodcutting and volcanic activity, there are virtually no trees on the island! There is one small "forest" that is a national landmark.
Word has it that Leif Ericsson named Iceland and Greenland like he did to get explorers to go to Greenland (only to find millions of square miles of ice). Iceland, though Greenland's neighbor, benefits from the gulf and jet streams. The warmest it got in my year there was 60F and the coldest was 0F. However, the wind blows almost constantly and reaches 100 mph (sustained for a day or two)! I had a friend who broke her leg when an empty dumpster rolled over her like a box blowing in the wind!
Hotels are going to be rather pricey, like most things in Iceland. However, you can find some lovely youth hostels, and camping space is easily available in the summer time. Campgrounds have showers and toilets, and in addition there are many public pools where you can go to shower. If it all gets to be too much for you, most pools also have jacuzzis or "hot pots" where you can soak away the stress.
If you are flying to Iceland via Icelandair, you may want to use their reservation network to book a hotel room.
Note: Hrafna-Flóki named the country Iceland and Eric the Red (father of Leif) named Greenland. Leif Ericsson found America.