It's just like any other business. Some people are skilled at picking and choosing who to loan to. Those people can make good money. Other people aren't so good at choosing the right lending opportunities. They either barely scrape by or they go broke.
The thing is that you cant know if someone is going to pay back even if they are legit and they are willing to pay back at first they may encounter some sort of problem and they wont be able to pay back, what are you going to do then, since you didnt want a collateral
That's true everywhere. Not just in the Bitcoin world. I have a number of credit cards in my wallet and every time that I use one, I'm getting a loan without collateral. Sure, I could walk away. But overall, the credit card company charges high enough interest to compensate for those who do walk away. It's the same with Bitcoin. The risk is much higher, but the potential rewards are higher too. It's a balancing act.
