How Reykjavik got its name.

Wikipedia has offered a rather contrived origin for Reykjavik. It goes like this: "The first permanent settlement in Iceland by Norsemen is believed to have been established in Reykjavík by Ingólfur Arnarson around AD 870; this is described in Landnámabók, or the Book of Settlement. Ingólfur Arnarson is said to have decided the location of his settlement using a traditional Viking method; by casting his high seat pillars (Öndvegissúlur) into the ocean when he saw the coastline, then settled where the pillars came to shore. Steam from hot springs in the region is said to have inspired Reykjavík's name, which loosely translates to Smoke Cove (the city is often referred to as the Bay of Smokes or Bay of Smoke)." There's no mention of the language in which smoke cove is reykjavik. Since the mind tends to associate hot springs with the place, somehow the explanation seems credible. But is it?
One look at the google map of iceland is enough to convince any Indian with a passing knowledge of Sanskrit, that most names seem to be of an indic origin. So why shouldn't Reykjavik have a Sanskrit root? Why can't it be derived from Rig Gyaanik (one who knows the rig veda) or Rig Avik (the fort of Rig Veda)? This seems highly possible as the icelandic edda is supposed to be the equivalent of the veda. Seeing this entire episode in the context of Bal Gangadhar Tilak's Arctic origin of the Vedas, I am almost tempted to ask myself: Was Reykyavik the home of the Vedas?