The first chapter in FotR; and as pivotal as any other.
Bilbo Baggins, an eccentric by Hobbit standards and a reliable and experienced burglar by Dwarf standards, has led an active and psychologically healthy life. However, the compulsion grows within him to taint his own birthday party with a vile "joke that nobody gets".
His most secret and precious possession, his Ring, has begun its twisting process. But Gandalf will soon note that Hobbit nature has a way of twisting back. Instead of using his Ring to commit some whacky crime, Bilbo is going to use it to get attention - exactly the opposite of the Ring's Level One abilities, and right in the middle of a party to honor Bilbo and give him enough attention already!
Like a neurotic cycle entering the release phase, Bilbo lashes out against the society that loves him and almost accepts him. Without a murder on his conscience it took Bilbo longer, but his transformation into the next Gollum is beginning.
And when Bilbo finally realizes this to himself, even though his Ring did not reject him, for the first time in history a Bearer is going to reject his Ring. --PhlIp