I think the main reason that Sauron created the Ring of Power was to get the best of those nassty Elveses. He believed that through the One Ring, he could perceive all that the bearers of the Three were doing, and control them.
This backfired on him, however, as the Elven ringbearers did not really use their rings as Sauron would have used them. The Nazgûl were fully enslaved, but the One Ring did not have the desired effect on Elves or Dwarves.
In the end, though, perhaps Sauron did get the last laugh. By destroying the One Ring, all that was created using the Three (most notably the protection against the fading of time that Galadriel placed around Lothlórien) began to fade. Galadriel in particular had to sacrifice a lot to defeat Sauron.
BUT in the end this worked out well for her, as the Ban of the Valar was lifted and she could return to Valinor. Wow... complicated!
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But Gwindor answered: 'The doom lies in yourself, not in your name'.
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