P2P Lending

The folks at LendingClub.com hope that business and economics classes will have to introduce a new financial process: p2p lending. The company allows individuals to borrow money from other individuals instead of financial institutions such as banks. They currently only allow people to lend in Facebook.

Why do you think that the company began it's operations in Facebook? What does it mean to have a friend in an online social network site? Do you have to meet somebody in RL before you can truly trust them? Why/why not? What advantages might come from borrowing money from other people instead of financial institutions? What additional risks might there be to lending money on your own, instead of investing it in a financial institution?