Transmission Control Protocol (TCP or TCP/IP) and User Datagram Protocol (UDP or UDP/IP) are both transport protocols layered on top of the Internet Protocol (IP). TCP/IP and UDP are compared below:
Connection Versus Connectionless — TCP/IP is a connection-based protocol, while UDP is a connectionless protocol. In TCP/IP, the two ends of the communication link must be connected at all times during the communication. An application using UDP prepares a packet and sends it to the receiver's address without first checking to see if the receiver is ready to receive a packet. If the receiving end is not ready to receive a packet, the packet is lost.
Stream Versus Packet — TCP/IP is a stream-oriented protocol, while UDP is a packet-oriented protocol. This means that TCP/IP is considered to be a long stream of data that is transmitted from one end of the connection to the other end, and another long stream of data flowing in the opposite direction. The TCP/IP stack is responsible for breaking the stream of data into packets and sending those packets while the stack at the other end is responsible for reassembling the packets into a data stream using information in the packet headers. UDP, on the other hand, is a packet-oriented protocol where the application itself divides the data into packets and sends them to the other end. The other end does not have to reassemble the data into a stream. Note, some applications might present the data as a stream when the underlying protocol is UDP. However, this is the layering of an additional protocol on top of UDP, and it is not something inherent in the UDP protocol itself.
TCP/IP Is a Reliable Protocol, While UDP Is Unreliable — The packets that are sent by TCP/IP contain a unique sequence number. The starting sequence number is communicated to the other side at the beginning of communication. The receiver acknowledges each packet, and the acknowledgment contains the sequence number so that the sender knows which packet was acknowledged. This implies that any packets lost on the way can be retransmitted (the sender would know that they did not reach their destination because it had not received an acknowledgment). Also, packets that arrive out of sequence can be reassembled in the proper order by the receiver.
Further, timeouts can be established because the sender knows (from the first few packets) how long it takes on average for a packet to be sent and its acknowledgment received. UDP, on the other hand, sends the packets and does not keep track of them. Thus, if packets arrive out of sequence, or are lost in transmission, the receiving end (or the sending end) has no way of knowing.
Note that "unreliable" is used in the sense of "not guaranteed to succeed" as opposed to "will fail a lot of the time." In practice, UDP is quite reliable as long as the receiving socket is active and is processing data as quickly as it arrives.