While in the specific scenario it's similar, in theory the 2nd scenario can be repeated an infinite number of times since it doesn't need to be tied to a "physical" share.
This creates the illusion that there's a LOT of people who believe the stock will go down in price, which can affect market sentiment and actually cause real movement when in reality that wouldn't be possible if every short was in fact backed by a real share (which they're trying to do via rules making Naked Shorts illegal).
This creates the illusion that there's a LOT of people who believe the stock will go down in price, which can affect market sentiment and actually cause real movement when in reality that wouldn't be possible if every short was in fact backed by a real share (which they're trying to do via rules making Naked Shorts illegal).