excerpt from the article "Creatures in Norse Mythology" via Life in Norway
Generally depicted as a giant squid or octopus – though sometimes as more of a crab – the Kraken is folklore's big beast of the sea. Said to measure more than a mile, its body is so huge than when on the surface it can be mistaken for an island.
Lying in wait in the deep waters, the Kraken rises up when disturbed by boats above. When sailors see its huge size they make for it, believing it to be the shore, only to be pulled downwards to their doom.
The Kraken may be inspired by the existence of the Giant Squid which, at 18m long, is a real monster of the waters. Thankfully, though, the real thing is seldom seen by humans, much preferring the deep, dark depths of the sea.