What is Digg?25 Comments
- ulyssesyt, on 10/12/2007, -1/+6truth is, it's not working. it's a collection of people with little money who are looking to get some.
also, the "105,000 members" statement refers to *people who registered at the site*, not people who've used it. only a few dozen have recorded transactions of any kind, and over half of those are reported in default.
this is an old idea, been done online before, and continues to fail. why? because the self-selected users are nearly all unable to qualify for funds at any lending rate from a bank, credit union or other institution. - StarManta, on 10/12/2007, -3/+6This cannot possibly end badly.
- killdashnine, on 10/12/2007, -1/+3I don't get it. Many people are already in too much debt. It seems to me that frivolous loans of sizable amounts of money could end up with investors getting the shaft when it comes to pay back the loans.
Credit Unions are still a good alternative to regular banks that people have alleged want to put people into debt. Living within one's means helps even more, even though it's hard to do. - Narrator, on 10/12/2007, -1/+3The real problem is that banks have access to fractional reserve lending which means that when you deposit money in your account at the bank they can lend it out. In a pinch they can access the discount window which is government financed, ridiculously low interest money. You can't lend money to people on prosper and spend it too and lend money for cheap from the feds when you get in a pinch. It's a peculiar feature of anglo/american style capitalism that the banks are given ENORMOUS advantages.
- inactive, on 10/12/2007, -1/+2Yes, I agree - I was going to check it out as an investment but the interest is not that much better than a savings account and possibly worse than shares, with more risk.
I would like to see one for VC's like JimMessenger said above, with higher limits/gains. - fishdan, on 10/12/2007, -1/+3You guys need to read up on microcredit. A Nobel prize was awarded to its innovator, and it seems to be remaking 3rd world economies. http://en.wikipedia.org/wiki/Microcredit
This could actually work. Will people try to game the system? Surely. But it could work - cosmicpoet, on 10/12/2007, -1/+3For some of the Digg users who have commented on "the idea" and have dismissed it as a failure, I'd say read about a recent Nobel Peace Prize winner, Mohammed Yunus, who pioneered the idea of micro-lending.
http://www.undispatch.com/archives/2006/10/mohammed_yunus.html
It is a good idea. The site(s) in question (Zopa, Prosper, etc.) might be less than stellar in their execution of the idea and they may be illegitmate, but the idea of micro-lending is a good one that has proven potential. - JimMessenger, on 10/12/2007, -2/+4 I wonder why Prosper sets a limit of 25,000? Perhaps the next social lending site will be geared towards VC's with much higher limits.
- cosmicpoet, on 10/12/2007, -1/+2@ fishdan
Whoops! Posted the same thing! Did you see the same episode of the Daily Show that I did, where Mohammed Yunus was the guest or are you just tapped into the Nobel Peace Prize winners? I'm not, so sadly, I'll admit I only knew about this because of Jon Stewart. - fishdan, on 10/12/2007, -1/+2I saw him on 60 Minutes, which should be online at CBS or youtube
- PossFIMH, on 04/12/2008, -0/+1The link below gets NEW lenders/ Borrower a £30 credit. (UK folks)
http://uk.zopa.com/member/PossFimh
I won't lie I'll get a credit too but hey.... I've been lending quite happily for a while. - rYno, on 10/12/2007, -0/+1http://www.duggmirror.com/tech_news/Social_lending_the_next_Web_2_0_phenomenon/
Social lending is cool - and I can see how it would be beneficial to loan money as you're being like a small bank but - trust and security slow my ambition to jump into this... I will do more research into prosper.com however. - rhettnyedotorg, on 10/12/2007, -1/+1anyone know a version for Canadians?
- gregwbrooks, on 10/12/2007, -1/+1I can't speak to the UK leader Zopa's success, but Prosper works quite well. Lenders (that'd be me) have full control over who they choose to lend to. Borrowers also have a degree of control they lack in a traditional lending situation because competition for the loan helps drive rates down a bit. Everyone wins.
Are some of them hard-luck cases that no bank would ever touch? Absolutely - and they pay a commensurately higher rate of interest for their loans. Remember, this is unsecured debt, which means that although you *can* go through a collections process, file suit, etc if they stiff you, you generally can't say "well, you bought this thing with the money I loaned you and since you're not paying me back, I get to take the thing." Unsecured debt is always more risky than secured debt, which is why traditional banks (which are, in general, very conservative in their lending practices) don't mess with it much.
As a lender (actually, I pool my cash with others in a fund that we lend out), I like the idea of spreading my risk. I can completely control my risk exposure by choosing to loan only to people with higher credit scores, only loaning fractional amounts to high-risk borrowers, or both. Look at it this way: If there are 20 really sketchy borrowers on prosper.com who want $1,000 each, and I choose instead to loan $100 to 10 of them rather than $1000 to one of them, then I've spread my risk of loss out considerably. Might one (or two or more) of the 10 flake out? Yes. But each deadbeat exposes me to only a fractional loss. This is one of the things that makes prosper.com work really well for lenders, IMHO.
To address m3mn0n's comment about "giving money to someone they've never seen or met online": Banks do it all the time with credit-card apps, home-equity loans and other debt instruments - propser.com gets enough info to pull a credit score and personal ID info from borrowers, which is just what a bank does with an online app. - inactive, on 10/12/2007, -4/+4So who wants to 'lend' me £500?
- m3mn0n, on 10/12/2007, -1/+1dugg but I think the concept is a bit sketchy... entirely too much to too much fraud and abuse/misuse.
If one needs money, one will go to a bank... it's a traditional approach to the whole situation, but it's a solid one because of all the measures in place to prevent system abuse and whatnot.
That's why the whole concept of the masses being a mini-bank for other members of this mass collection of people just doesn't seem like an idea that'll fly. Regardless of its implementation. Trust being one of the biggest hurdles that'll need to be overcome.
How do you get everyone comfortable with giving their money to someone they've never seen or met online? - au071, on 10/12/2007, -2/+1i don't think it will work either, too much fraud online.
- ulyssesyt, on 10/12/2007, -2/+1it's not the same thing, or the same scale, or the same population. for starters, the microcredit is often a few dozen dollars, lent at almost no interest. the lendees have no other credit, are carefully monitored by a lending institution, and if in default must surrender the goods bought with the credit.
is microcredit succesful? only in some places, like the one you quoted. in other places in the world, it's been a dismal failure. - devilshark, on 10/12/2007, -4/+3I call *****
- pestilence4hr, on 10/12/2007, -2/+0What's the deal with their registration? The confirmation email hasn't arrived, and it's been about 30 minutes (and I've re-requested twice)... maybe it is a little shady.
- Art9681, on 10/12/2007, -4/+2I have used the services Propser offers and it was the greatest experience. I highly recommend the site to anyone looking to borrow money.
- mugenkeiji, on 10/12/2007, -3/+0No kidding. This is the quintessence of the adverse selection problem: http://en.wikipedia.org/wiki/Adverse_selection
- devilshark, on 10/12/2007, -4/+1No doubt. Did you check out the pics on Prosper. Sleazy mobsters all....
- mugenkeiji, on 10/12/2007, -3/+0It will never work until it comes to resemble the current banking system, for the simple reason that anything which is dependent upon naive faith in other people will inevitably be proven wrong.
Sooner or later some poor person who is lending will realise 'Wait: if they have structured their debt such that they no means of legal recourse and rely on trust to achieve satisfaction of the debt, why don't I just lend a huge amount, or many small amounts, and never pay it back?'
Yunus won the Nobel Prize for peace, not economics, for good reason. His concern is philanthropy and he can never achieve a better result than a traditional bank. - Grumps, on 10/12/2007, -6/+0Cant wait to see some scam happen. It obviously cant guarantee anything..
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