Naked shorting is not some clever little parlour trick. It …

Naked shorting is not some clever little parlour trick. It is leverage dressed as sophistication, which is to say vice wearing a dinner jacket.
If a financial institution does not have to deliver the asset, but only settles in cash, it can create exposure far beyond the actual supply. It is not buying the thing. It is betting on the price of the thing while politely avoiding the nuisance of reality.

On the way up, a buyer needs capital, custody, liquidity, and someone willing to sell. How vulgar. How limiting.

On the way down, the short seller needs pressure, margin, synthetic exposure, and enough fear to make everyone else sell first.

That is why the profit can be grotesquely asymmetric. A modest move down, multiplied through naked or synthetic short exposure, can return many times the capital actually posted. Not twice. Not ten times. In thin markets, with enough leverage and cash-settled contracts, the gain can become obscene.

And if the asset itself is illiquid, the strategy becomes even uglier. They do not merely profit from falling prices. They help manufacture the fall. They drain bids, frighten holders, crush collateral, trigger liquidations, and then dine delicately on the wreckage.

Buying an asset supports liquidity.
Naked shorting can consume it.

One is a market.

The other is a gentlemanly mugging with paperwork.