The Matrix Beta Versions or Prototype Matrix Versions are earlier versions of the Matrix created by The Architect before the current known version. There were two such beta versions and both versions considerably failed with the majority of humanity unable to accept the programming and dying as a result. The third and current version of the Matrix, which incorporated The Oracle's insights about humanity's need for choice, is currently on its seventh cycle/iteration.
During the course of the Machine War, humanity found itself entirely outmatched by the Machines and thereby agreed to a full surrender, with the remaining surviving humans being spared and taken to be studied and plugged into the first Matrix power plants.
The First Prototype Matrix
- Main article: Paradise Matrix
The first Matrix beta (also informally referred to as the "Paradise" Matrix) was designed to be a perfect human world, where none would suffer and everyone would be happy. It was designed as a utopian realm where one's desires, namely the mind connected to it, would manifest. However, many human minds did not accept the programming and died as a result.
Agent Smith, while relating this story to the incarcerated and drugged Morpheus, noted that "it was a disaster, no one would accept the programming, entire crops were lost", implying that many humans died because of their sheer inability to accept paradise as their reality. Smith also cited that there were those amongst the Machines who believed it failed because "they lacked the programming language to describe your (humanity's) perfect world."
The Second Prototype Matrix
The second Matrix beta was created by The Architect in an attempt to address humanity's rejection of a perfect world; designing this version based on human history "to more accurately reflect the varying grotesqueries of your (humanity's) nature".
The Nightmare Matrix
- Main article: Nightmare Matrix
Much like how The Architect misunderstood humanity and attempted to placate them by offering paradise, a theory suggests that The Architect misunderstood human history and defined the "grotesqueries" of human nature to imply the need for a hellish "Nightmare" Matrix.
The Modern Matrix
As I was saying, she stumbled upon a solution whereby nearly 99% of all test subjects accepted the program as long as they were given a choice, even if they were only aware of the choice at a near-unconscious level.”
― The Architect to Neo[src]
The solution was ultimately stumbled upon by an intuitive program, originally intended to study certain aspects of the human psyche: The Oracle. She discovered that if humans were given a choice, even at a subconscious level, to accept the reality of the world around them, ninety-nine percent of humans would accept the virtual world. Thus the Architect redesigned the Matrix into its third and current form, a realistic world approximating human civilization at its peak, circa 1980 - 2025, right before humans started developing Artificial Intelligence that produced the Machines.