What is Chi?

Perhaps the most basic and general principle of Taoist thought is the concept of Chi. Its status in Chinese philosophy is developed  in the popular works of Lao Tzu (604-511 B.C.) and Chuang Tzu (399-295 B.C.), but its origins go back much further. The word Chi has many translations, such as energy, air, breath, wind, vital breath, vital essence, and so forth. Although difficult to define, it can be thought of as the activating energy of the universe.

Chi condenses and disperses in alternating cycles of negative and positive (Yin and Yang) energy, materialising in different ways, forms, and shapes. It can be neither created nor destroyed. Instead, Chi transforms itself and reappears in new states of existence. All states of existence, therefore, are temporary manifestations of Chi, especially those of physical matter.
Chi is the source of all movement in the universe

The motions of the stars and planets, the radiation from the sun, and the patterns of our thoughts and emotions occur because of Chi. It is considered to be the source of our life-force and the animating factor in all living beings.

Chi also binds things together It is what keeps the constituents of our bodies from separating and dissipating. When the human body loses its breath of life, the original energy (life-force) leaves it, allowing the body to decompose.
Chi holds the organs, glands, blood vessels, and other bodily  parts in place. 

When the body's Chi becomes weak, a loosening  of  the organs can occur in which they drop from their normal positions, leading to poor functioning and ill health. Chi also warms the body; any increase or decrease in bodily heat  indicates the strength of its flow. We think of warmth in mammals as a "vital sign," showing that Chi is present.
The Chi that forms the heavens and earth is essentially the same as the Chi that forms living beings. This was expressed by the ancient Chinese philosophers as follows:

Wu Chi The Great Void consists of Chi. Chi condenses to become the myriad things. Things of necessity disintegrate and return to the Wu Chi. If Chi condenses, its visibility becomes effective and physical form appears. Chi in dispersion is substance, and so is it in condensation. Every birth is a condensation, every death a dispersal. Birth is not a gain, death not a loss... When condensed, Chi becomes a living being; when dispersed, it is the substratum of change.- Zhang Tsai (1020-1077 A.D.)

A human being results from the Chi of Heaven and Earth. The union of the CM of Heaven and Earth is called human being.-Simple Questions,
In The Foundations of Chinese Medicine, Giovanni Maciocia explains:

According to the Chinese, there are many different "types" of human Chi, ranging from the tenuous and rarefied, to the very dense and coarse. All the various types of Chi, however, are ultimately one Chi, merely manifesting in different forms.

The Bibles Book of Genesis says, "God created man in His image." Similarly, in Chinese thought, human beings are a microcosm of the universe. Thus, Chi flows throughout the universe, and it also flows through Humans. Through studying how our own Chi works, we can also understand the workings of the universe. In Taoist Inner Alchemy, we begin the process of spiritual exploration within the laboratory of our own body and mind.
The highest goal of Taoist Inner Alchemy is to transform our cells to unite with Cosmic (Higher Self) Energy and become immortal cosmic cells of the universe.

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