One-sentence summary; What is USB4
USB4 is the USB-C form factor for connecting; fully supports the Thunderbolt 3 specification, all wrapped up using the USB 3.2 specification.
USB4 has four benefits over prior versions of USB.
Maximum speed of 40Gbps. Using two-lane cables or a set of cables, devices may operate at up to 40Gbps, the same speed as Thunderbolt 3. Keep in mind there is a big difference between Mb and MB. Mb is megabits, not megabytes (MB). For example, 8Mb is about 1MB of data. As a reference, a typical MP3 audio file is about 3MB (megabytes). 5,000MB/second is the theoretical maximum speed of USB4.
USB4 supports DisplayPort 2.0. DisplayPort 2.0 cables feature 80Gbps bandwidth, making it possible to display ultra-high resolutions at previously impossible refresh rates. DisplayPort 2.0 can handle up to two 4K screens at 144Hz simultaneously, or an 8K display at up to 85Hz natively, with no form of image compression. This is possible because USB4 can use all eight data lanes at the same time.
Compatible with Thunderbolt 3 devices. USB4 is a protocol which supports all the specifications of Thunderbolt 3; however, Thunderbolt 3 is capable of 100 watts of bi-directional power delivery and not all manufacturers who support USB4 will include the full power implementation of Thunderbolt 3.
More efficient resource allocation. USB4 devices use a process called protocol tunneling, which optimizes the use of DisplayPort, PCIe, and USB packets at the same time while allocating bandwidth to improve efficiency. This approach can deliver better performance across multiple connected devices using different protocols.
USB4 will only operate through a USB-C type physical connector. USB4 peripherals will most likely not support older USB Type-A ports because the connection speeds and power delivery mechanisms will not be available. Although USB4 is backward compatible with all other USB protocols, it does not mean older standards will receive the improved benefits. For example, if you connect a Type-A 5Gbps USB 3 port using an adapter, the speed and power will drop to the lowest common denominator.
Some notable comments:
Device and host manufacturers are not required to pay Intel royalties when implementing USB4 technology. This improves the chance of mass adoption. However, there is a catch between manufacturing USB4 devices and making products fully USB4 compliant. Specifically, the Thunderbolt compatibility specification may become part of the product requirements for using the USB4 logo. This could mean a consumer buys a laptop with USB4 and later discovers it does not work with a Thunderbolt 3 peripheral.
It is important to know Thunderbolt 3 and Thunderbolt 4 are logo-certified programs from Intel which cost manufacturers time and money. While a USB4-powered computer may work with 40Gbps devices or even those labeled as Thunderbolt, this may not be obvious because the product did not go through certification. The opposite can also be true: a USB4 device may not support Thunderbolt due to the cost required for certification.
USB4 has two speed tiers. As with Thunderbolt, a USB4 product may not support the full 40Gbps specification. 40Gbps is the theoretical maximum speed, but many devices will use the lower 20Gbps standard because manufacturing costs are lower, resulting in a lower price for consumers. If speed is a priority, check the specifications of the USB4 product before purchasing. At the time of writing, most USB4 products that support 40Gbps are cables and PCIe adapter cards.
Why the USB4 name?
An online article summarizing an interview with Brad Saunders, CEO of the USB Implementers Forum (USB.org or USB-IF), indicated the lack of a space between “USB” and “4” is intended to move focus away from version numbers and toward branding. This branding change makes sense, but the long history of USB versions will likely continue to cause confusion.