What does P2P mean?

P2P (peer-to-peer) in finance refers to a decentralized, online platform that connects individual investors with borrowers, bypassing traditional financial intermediaries such as banks. In a P2P lending or investing model, individuals can lend money directly to other individuals or small businesses, or invest in loans to earn a return on their investment. This type of lending and investing allows for more personalized and flexible terms, potentially lower interest rates for borrowers, and the opportunity for investors to diversify their portfolios with alternative assets. However, P2P lending also carries its own risks, such as credit risk and potential default by borrowers, as well as regulatory and legal considerations. Overall, P2P in finance represents a shift towards a more inclusive and efficient financial system where individuals can directly participate in the lending and investing process.