The master science fiction writer Robert Heinlein elegantly described the three phases of technology in his short story entitled "The Rolling Stones" in this way:
Every technology goes through three stages: first a crudely simple and quite unsatisfactory gadget; second, an enormously complicated group of gadgets designed to overcome the shortcomings of the original and achieving thereby somewhat satisfactory performance through extremely complex compromise; third, a final proper design therefrom.
Many people describe Bitcoin as Blockchain 1.0 technology. Is this fitting?
Yes, Bitcoin represents the very introduction and initial use case, digital money, of the blockchain. Thus it is fair to label it as Blockchain 1.0. Does it mean we are done with Blockchain 1.0? Not really, because the consensus mechanism (Proof of Work versus Proof of Stake) is still an active area of research. So, while we are mostly out of the first stage, there are still some issues to be resolved before we can say that Blockchain 1.0 technology is mature. This is very important to understand because you cannot move from one stage to the next by fiat. You can only move from one stage to the next by adding a significant innovation.
Ethereum is often characterized as Blockchain 2.0 technology. Is this fitting?
Yes, Ethereum introduced a Turing-complete programming language to the blockchain. We can think of this as introducing the "programmable blockchain" and thus Blockchain 2.0 technology.
Now, herein lies the problem - if you want to supplant Ethereum what is your next logical move - why assert yourself as being "Blockchain 3.0" technology! That will surely make it so, right? WRONG! You only get to claim a new major version of a technology when you have added something new. Cardano, Polkadot, and Algorand are all still slightly tweaked versions of the "Programmable blockchain". In other words, we are still experimenting with what it means to have a "Programmable Blockchain" and it is not "settled science". Thus, we are NOT out of stage 2.0 of blockchain technology despite every new platform claiming to be a 3.0 technology stack. That is marketing and not science!
So, how is this insight important to Cryptocurrencies and the industry springing up around them? Understand that the technology is still evolving... We are not in the "mature" stage yet ... we are still in the "teenage" years and still growing. Thus, expect more innovation and expect more volatility with that new innovation. Need more proof? We cannot even adequately define what a "smart contract" is, yet we have new platforms feverishly claiming that their platform can out-smart-contract the other ones... That is just evidence that we are not done defining what a "smart contract" should and should not be. So, hang on for the ride, because we are only midway through the evolution of cryptocurrencies!
