Do Japanese refer themselves to Japanese?

Question:

I usually hear nihon or nippon. Can you explain how the word Japanese came and who mostly use it?

Answer:

Nihon or Nippon is written 日本
This was pronounced something like Chipangu in old Chinese language.
Marco Polo, 13th. century, heard of it while he was traveling in China and introduced it to Europe. "There is a big island which is full of gold and pearls. That country is called ZIPANGU"
Later on, Zipangu had been changed to Japan.

Marco Polo:
http://en.wikipedia.org/wiki/Marco_Polo