Risk on the net: Trust or Bet?

On www.prosper.com you can lend money to people you don’t know the same as a bank does: with no real garantees of being paid back. It’s not really a problem for a bank, who’s got plenty of borrowers and incomes and is not even a person. But how is it possible that individuals take such a risk?



Of course there’s the is the reputation system built by the website, quite similar to ebay, with trust ranking and other scores. A kind of transparency to make up for the incertitude on virtual spaces. But there’s more to it.



Let’s just look at a few key words on the home page:



For me there is two different drives for the lender (we won’t talk about borrowers, whose reasons are obvious)




1: financial drive

Definitly the main one: as banks, people lending money on prosper just hope to earn money. It’s about rates, returns. Investing is also gambling, whatever you do. So why not gamble on people rather than on horses or cash machine, or real estate? You can lend as few as 50$, and are advised to spread your lends.Though not put into relief, help and explanations are provided on the website, with reassuring comparison to the well known system of banks (for example, Prosper takes extra care in verifying the identity of all borrowers and lenders; Lenders base their lending decisions on borrowers’ credit grades and other factors. At the federal level, Prosper is regulated by the Federal Trade Commission insofar as it must conform to the Truth in Lending Act, the Equal Credit Opportunity Act, and the Fair Credit Reporting Act.)

To cut it short, it’s an investment as risky as any other. Trust there is a bet on luck




2: moral drive?

Other interesting words on the home page: help, fellow, community. Go and have a look at groups: the bigger are gay/lesbian and christian, that is to see communities of peers with strong bounding values and solidarity. Some will state that “money isn’t always about money” and highlight generosity : trust there is a bet on humanity.




There are others sites like prosper: Lendingclub.com, for Facebook members, or Zopa.com.

There will probably more of them, depending on the prosperity of the first.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: