Acharya Prashant explains that truth and fakeness are not properties of external objects but are internal states of the individual. He asserts that truth is the capacity to see and understand. If one recognizes something as fake, that very understanding constitutes the truth. When a person is in a state of observation, they are the truth; conversely, when one is dreaming or imagining, everything remains fake because the capacity to follow the truth is absent. The speaker highlights that self-concepts, identities, and personal views are inherently fake because they are merely thoughts and imaginations. To truly know oneself, one must first acknowledge that they do not already know. He points out that people often claim to know who they are through various identities, which prevents genuine inquiry. To reach the truth, one must be prepared to give up these false identities and preconceived answers. Acharya Prashant distinguishes between knowledge and knowing. Knowledge consists of stored information, concepts, and notions gathered from books and external sources. In contrast, knowing is a spontaneous process that occurs when one is present and observant. While knowledge can be stored, the act of knowing is immediate and cannot be preserved as a static entity.