From the beginning of time, humans have been wired to keep succeeding, to amass more goods, and to expand their horizons. For many, this meant getting a loan from a friend to tide them over until the next harvest, or until a shipment of goods came in. Peer-to-peer lending has been in existence for thousands of years, even if it wasn’t always called by this name. Its existence has remained constant and the general concept is still in use today.

The origins of peer-to-peer lending have been greatly debated, but it was the first civilizations in Mesopotamia that were believed to have had the most impact on this type of lending. It was here that the first limits were instituted on the amount of interest that could be charged for a loan.

Clay tablets dating back to Mesopotamian times show an interest rate cap of 33½% was put into place for loans on grain, while silver had a slightly lower cap of 20%. These rules were believed to have been instituted in 1900 BC and many surrounding civilizations picked up on this concept.

Hammurabi, a Babylonian ruler that lived around 1750 BC, was also very instrumental in the development of peer-to-peer lending. Many of the documents that have been attributed to him discuss lending fundamentals, and how the practice should be carried out. In Hammurabi’s Code, a series of tablets on various subjects, he expounded his rules on loans for crops.

These rules dictated the maximum duration of a loan, the delivery method for repayment, as well as what a lender could do if a crop failed and there was no means of exacting payment for the loan. This is some of the first recorded evidence of peer-to-peer lending and would greatly affect the future of this type of loan.

In these ancient times, the concept of collateral was much different than it is today. For example, it was acceptable for a borrower to use their concubine to secure a loan. Other forms of collateral during this time included crops, slaves, or even one’s own children.

Fast forward to our current times and, although peer-to-peer lending has changed with respect to types of collateral, the general concept is still the same. It is much easier to get financing when dealing with a friend or otherwise bypassing a bank. And, in most instances, the interest rates are still capped - similar to what Hammurabi discussed in his famous tablets.

All cultures have their own history when it comes to peer-to-peer lending, but the 21st century developments may prove to be the most fascinating. Suddenly, people from all over the world have the ability to connect online, and vast new opportunities for peer-to-peer lending have opened up as a result.