I like those platforms in principle, but I don't think investors reallly understand what's in it. The truth is, you're creating your own asset-backed security based on loans originated to refinance credit card loans or finance personal projects for what is (I assume) a pretty narrow slice of the population.

Just like banks and other players (ahem rating agencies) before the financial crisis assumed ABS were safe because they were diversified ("the housing market cannot collapse uniformly accros the country"), they can actually become very correlated in a very short amount of time.

So even though peer-to-peer lending is an interesting proposition, it is important to understand that it can potentially become ugly and sticky...