How Does Selling a ‘Covered Call’ Mitigate the Risk of a Naked Call Option?

Selling a 'covered call' involves writing a Call Option while simultaneously owning the equivalent amount of the underlying cryptocurrency (e.g. Bitcoin).

This strategy is "covered" because the underlying asset acts as collateral. If the Call is exercised, the seller simply delivers the crypto they already own, thereby eliminating the unlimited loss risk associated with a naked (uncovered) call, where the seller would have to buy the crypto at the high market price to fulfill the obligation.