In this chapter, Bilbo undertakes the traditional task of the hero — killing the dragon. His adventures so far have prepared him for this task: He has grown in judgment, resourcefulness, and bravery; additionally, he has the ring with the magical power of invisibility. It is in recognition of his suitability for the task that Thorin sends him to investigate the dragon. And it is inside the mountain that Bilbo experiences his moment of greatest bravery, when he decides to continue on in search of the dragon despite his fear. This decision is described as being central to Bilbo's character and significant in that it is a moment alone, with his own conscience.
Bilbo does confront Smaug the dragon and, like his encounter with Gollum, he matches wits with him in conversation. During the conversation, however, he looks for the vulnerable spot on Smaug's body. Bilbo knows Smaug must be killed and, rather than avoiding it, Bilbo develops a strategy for accomplishing it. In bringing back the cup from Smaug's lair, Bilbo demonstrates to others that he has indeed been in the place of danger and has brought back a trophy to prove it. This is an act that is typical of the questing hero of legends and fairy tales.
The stories about the treasure that the dwarves tell mention the Arkenstone for the first time. It is a sacred object for the dwarves, almost like the holy grail of Arthurian legend.
