Person-to-person lending [Masterarbeit]

Credit, which is at the heart of person-to-person lending, is both a powerful and dangerous invention. It lets people work with resources they do not have, allowing them to start a project, improve their conditions, or to resolve unforeseeable incidents. But at the same time it is also an often underestimated risk that can lead to long lasting debt or even default.

Because person-to-person lending works without a middleman, both both creditor and debtor get better rates. But it also requires new mechanisms to distribute the risk of a debtor's default. The first person-to-person lending website, Zopa, appeared in 2005 and has mediated £25 million until 2008.

Similar to person-to-person lending, but different in spirit, are micro credit platforms like Kiva. They allow interested lenders to directly support entrepreneurs in poor countries around the world. As little as $700 can help a farmer buy seeds and start a crop that he wouldn't be able to do otherwise. Instead of interest on their money, these lenders get back success stories and photos.

These platforms show, that innovative approaches to handle money using the Internet can be successful. There are certainly technical and legal difficulties, that keep banks from innovating in this area, but I think they are also just too concerned with their current processes.

Just mirroring the existing system onto networked media will not lead to the enriching innovations that could be possible. Instead, we should consider the core needs of people to find out what exactly they need to accomplish. Taking this step back first will allow the design to be guided by the rules and possibilities of the involved media, instead of fixing things that are no longer broken within the new context.

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