The structural, electronic, and vibrational properties of the free finite carbon chains and those encapsulated inside carbon nanotubes (CNTs) are studied by density functional theory calculations. The end effect and chain symmetry are found to play key roles in deciding the structural characteristics of the free finite carbon chains based on the parity of the carbon numbers. Due to the potential interaction between the carbon chains and CNTs, the electrons of the chain-CNT systems will redistribute, and some charges may transfer to the inner carbon chains from CNTs. We suggest that the attractive potential of chain atoms inside CNTs could be the driving force for formation of the linear carbon inside CNTs. Unexpectedly, we find that inside CNTs the carbon chains with even-numbered carbons present almost constant bond length alternation, which is independent of the chain length. This trend of the even-numbered carbon chains in CNTs helps to explain the universal experimental observation that the Raman peaks from chains in CNTs are within 1820-1860 cm(-1).