In the past few years, the so-called P2P lending industry has certainly experienced tremendous growth, with origination volume doubling annually, reaching $24 billion globally in 2014.

Morgan Stanley forecasts that global originations will grow at a 51 percent CAGR and reach a staggering $290 billion by 2020. P2P lending startups also have attracted an enormous amount of attention from venture capitalists: According to Dow Jones VentureSource, U.S. lending startups raised $2.4 billion in the first three quarters of 2015 alone. Yet despite all this excitement, there are many things that are misunderstood about the industry.