Gamma-ray bursts are believed to result from the coalescence of binary
neutron stars. However, the standard proposals for conversion of the
gravitational energy to thermal energy have difficulties. We show that
if the merger of the two neutron stars results in a naked singularity
, instead of a black hole, the ensuing quantum particle creation can p
rovide the requisite thermal energy in a straightforward way. The back
-reaction of the created particles can avoid the formation of the nake
d singularity predicted by the classical theory. Hence cosmic censorsh
ip holds in the quantum theory, even if it were to be violated in clas
sical general relativity.