Acharya Prashant explains that the core of a human being is intelligence, which is the innate ability to understand. This intelligence is the only true quality that belongs to an individual, while everything else is peripheral and acquired from the outside. He emphasizes that while we are essentially intelligence, we often identify ourselves with external labels such as gender, profession, nationality, or family names. These labels, which are acquired from society or through the process of evolution, form the 'ego'. The ego is defined as the sum total of all false identities and any statement beginning with 'I am' followed by a label.