shortening of Old English ic,first person singular nominative pronoun,from Proto-Germanic *ekan (cognates:Old Frisian ik,Old Norse ek,Norwegian eg,Danish jeg,Old High German ih,German ich,Gothic ik),from PIE *eg-,nominative form of the first person singular pronoun (cognates:Sanskrit aham,Hittite uk,Latin ego (source of French Je),Greek ego,Russian ja,Lithuanian aš).Reduced to i by mid-12c.in northern England,it began to be capitalized mid-13c.to mark it as a distinct word and avoid misreading in handwritten manuscripts.
The reason for writing I is ...the orthographic habit in the middle ages of using a 'long i' (that is,j or I) whenever the letter was isolated or formed the last letter of a group; the numeral 'one' was written j or I (and three iij,etc.),just as much as the pronoun.[Otto Jespersen,"Growth and Structure of the English Language," p.233]
The form ich or ik,especially before vowels,lingered in northern England until c.1400 and survived in southern dialects until 18c.The dot on the "small" letter -i- began to appear in 11c.Latin manuscripts,to distinguish the letter from the stroke of another letter (such as -m- or -n-).Originally a diacritic,it was reduced to a dot with the introduction of Roman type fonts.The letter -y- also was written with a top dot in Old English and early Middle English,when it tended to be written with a closed loop at the top and thus was almost indistinguishable from the lower-case thorn (þ).