Acharya Prashant addresses a perceived contradiction in Lao Tzu's teachings regarding virtue. He explains that when virtue is conceptualized, labeled, or recognized through memory, it ceases to be authentic and becomes evil. This is because knowledge based on recognition is merely a mechanical matching of patterns from the past, lacking originality and intelligence. True virtue must come directly from the heart and the truth, rather than from stored data or pre-existing images in the brain. When we judge someone as virtuous based on pre-scripted actions, we fall into hypocrisy and allow false virtue to act as a fatal substitute for the real essence. He further clarifies that evil is dangerous not because it can overpower us, but because it has the power to deceive by appearing as virtue. Real virtue is the natural state of a saint who does not even know they are being virtuous. A saint does not follow objective standards of goodness; rather, goodness is defined by whatever the saint does from their state of being. The speaker emphasizes that virtue is inseparable from the wholeness of one's being and cannot be replicated in parts. He cautions against creating artificial distinctions between what we consider 'holy' and 'ordinary' actions, as true virtue is multifaceted, unpredictable, and choiceless.