My personal credo for the last twelve years has been:” L’Histoire se repete”.Today when you take a look at what is happening in the world it feels like yesterday that the dot.com bubble burst. I was working in the internet industry when this happened. But what did happen those days?During the early days of the internet the trees grew streight into the sky. People were writing business plans. No ‘common sense’ business plans but ‘wishfull thinking’ business plans. When all this wishfull thinking turned out not to be profitable people relying on only superficial information panicked. People did not do proper research. They never fully tried to understand the potential of the internet technology and thus were open to be dragged into adventures based on greed. Virtual had to be realistic again to get the world moving again. These days history repeats itself. The financial markets are clashing. This time we have a dot.cash bubble that bursts. Financial constructions, based on greed and watered with wishfull thinking have created huge trees with hardly any solid roots in the ground. The moment the world starts shaking these financial trees they crumble and colapse. Now what is the lesson for us, human beings, to learn from what’s happening? That we are not ready to fully understand and live with virtual reality. It seems that even top executives has lost their way in what was real and what was wishfull thinking. Or is it that greed in the end will not pay-off?For me I do think that the internet and the virtualisation of society brings us huge advantages. But most of our educational systems are still based on the old industrial principles. they learn us to value what we can grab but they never try to explain how systems are interrelated.Maybe, quantum physics comes closest to explaining what is happening. Nothing we see is solid. The financial markets are no solid constructions! Einsteins relativity theory offers a great point of perspective to watch what is called in the media teh financial crisis.What looked solid to millions of people only proofs to be a web of information spun around, almost nothing.Today we have to learn how to cope with the new reality: Nothing is what it seems and the Dot.Cash bubble burst proofs it.
After turning the music- and telephony industries upside down, peer-to-peer technologies are moving into the financial markets. The principle is simple. Accept the fact that there are two kind of people. The people that have money and the people that need money. In the old days we would think that people at the bank are the people to turn to for money but not in the internet era. Today everybody that has money can ask for it to anybody that has it and smart internet applications form the virtual middleman.One step back before we speed ahaid.
What do music, telephony and money have in common?
They are all stored in bits and bytes and they are distributed over the internet. By using peer-tp-peer technologies new ways of lending money are introduced and we all become our own banks.
Peer-to-peer banking big business
Back in 2005 Zopa was the first to surface on the internet. They started their lending site in the UK. The Zopa founders understood that money business is all a matter of trust, networks and computers. Zopa explains itself as: “the world’s first social finance company“. They pioneered a way for people to lend and borrow directly with each other. They thought it there mission to give people around the world the power to help themselves financially at the same time that they help others. Zopa’s makes money from charging borrowers an exchange fee of 1%. If borrowers take out repayment insurance on their loans Zopa receives commission from the insurance provider. Lenders aren’t charged by Zopa. This revolutionises the financial world as the big margins banks charge are wiped out.
That this was not a whimp from some idealistic programmers. In july 2007 the estimated number of peers involved in lending was 1.3 billion. Zopa has not been lonely as Prosper (US), Smava (German) and the Dutch Boober offer like wise services. In China, well known for copying, PPDai launched in july last year. For a quick course in chinese lending figure who is having money and who aint?
P2P lending changes slightly from country to country but enters a very different market in the People’s Republic. In China personal credit ratings are virtually non-existent, making lending to strangers riskier business. PPdai therefor primarily aims to standardize and facilitate loans between family and friends, which are more common in China than personal loans from banks.
The banking world is next in line to meet innovative technologies that bring the power to the people or better take the money from the people to the people without banks in between. And the banking industry is working hard to loose it’s trust espcially with US and French banks blundering billions of dollars simply down the drain. Whow saving were in those banks.
Disruptive markets, next week the disrupted media world.