In the crypto market there is Bitcoin and then all the other coins are called alternate coins (ALT coins). That's the classification we've all been knowing so far. I decided to do a bit of research and classify them into different categories so that it would be easy for beginners to understand the different types of crypto currencies. It would be wise in diversifying your portfolio by picking up coins from different categories with strong fundamentals rather than investing all from the same category. By investing in this way you would pick up coins that are here to stay in the market.

1) CURRENCY:

These coins are used as a store of value and can be used for peer to peer transactions. P2P transactions involve no third party so it is completely decentralized.

The most famous coin that you all would probably be knowing is Bitcoin. The many forks of Bitcoin also come under this category.

• Bitcoin (BTC)
• Bitcoin Cash (BCH)
• Bitcoin SV (BSV)
• Bitcoin Diamond (BCD)
• Bitcoin Gold (BTG)
• Litecoin (LTC)
• DigiByte (DGB)
• Dogecoin (DOGE)
• Ripple (XRP)

This category can be further divided into Privacy Coins. 

Privacy Coins:

These coins are also used as a store of value and for P2P transactions but as the name says it is private it nature. It is difficult to trace the transactions. The coins that fall under this category are

• Monero (XMR)
• Dash (DASH)
• Zcash (ZEC)
• Zcoin (XZC)
• Bytecoin (BCN)
• PIVX (PIVX)
• Bitcoin Private (BTCP)

Europol admitted recently that Monero cannot be traced and find it difficult in tracking the transactions. (Source)

2) Smart Contracts:

Smart contracts allows users to add conditions and hence the transactions can be carried out only if the conditions are met. The aim of these coins are to become the world computer on which decentralized appications (dapps) can be built. At present Ethereum with its Etereum Virtual Machine(EVM) is leading the race on becoming the global computer with the transition to Ethereum 2.0 on the horizon. Ethereum boasts the most number of dapps built on it.

• Ethereum (ETH)
• EOSIO (EOS)
• TRON (TRX)
• NEO (NEO)
• TEZOS (XTZ)
• Cardano (ADA)
• Stellar Lumens (XLM)
• Ethereum Classic (ETC)
• Ontology (ONT)
• ICON (ICX)
• Qtum (QTUM)
• Waves (WAVES)
• Zilliqa (ZIL)

3) Decentralized Finance(DeFi):

Finance built on a blockchain with the help of smart contracts on a blockchain platform like Ethereum. No banks are involved and all deals are secured using smart contracts. 

• Ox (ZRX)
• Kyber Network (KNC)
• Augur (REP)
• Unibright (UBT)
• Komodo (KMD)
• Loopring (LRC)
• Bancor (BNT)
• BitShares (BTS)

4) Stablecoins:

As given in the name the function of the coin is to remain stable the value of the asset does not change. The coins are pegged to fiat currencies, real world commodities like gold which are precious metals and also crypto currencies (ETH).

• MakerDAO (DAI)
• Tether (USDT)
• Digital Gold Tokens (DGX)

5) Gaming and Gambling Coins:

These coins are used for buying in game products and for betting in betting sites. 

• ENJIN (ENJ)
• Decentraland (MANA)
• WINK (WIN)
• STORM Token (STORM)
• Fun Fair (FUN)
• Worldwide Asset Exchange (WAX)

6) Social Media Coins:

Content creators can connect with their followers by posting articles/videos and getting rewarded for the content they post. 

• Steem (STEEM)
• Theta TV (THETA)
• BitTorrent (BTT)
• BASIC ATTENTION TOKEN (BAT)
• Chiliz (CHZ)

7) Crypto Currency Exchange Tokens:

Certain exchange platform offer their own exchange tokens for generating more volume and discount in trading fees.

• Binance Coin (BNB)
• Huobi Token (HT)
• Kukoin Shares (KCS)
• OKEx Token (OKB)

8) Utility tokens:

These coins serve a particular purpose and have a certain use case in the industry. 

Interoperability:

The function of these coins are to create a solution such that two blockchains can communicate with each other or a blockchain can fetch data from the off chain world.  

• Chainlink (LINK)
• Hydro (HYDRO)
• Ontology (ONT)
• Wanchain (WAN) 
• COSMOS (ATOM)

Internet of Things:     

It is a technology where human to human or human to machine interaction is eliminated. The focus is to facilitate machine to machine communication with the help of data from sensors and other devices.

• MIOTA (IOTA) 
• Waltonchain (WTC)
• IoTeX (IOTX)
• Request Network (REQ) 

Distributed Storage:

These coins encourage cloud storage but rather than being stored by a single entity the data is distributed across the world and is run by networks all over.

• Storj (STORJ)
• Siacoin (SC)

Application Development:

Coins focus on developing certain blockchain based tools.

• Vechain (VET)
• Lisk (LISK)
• Dragonchain (DRGN)
• Stratis (STRAT)

Scalability:

Coins that focus on improving the number of transactions per second thereby increasing the throughput and making it more scalable. 

• Matic Network (MATIC)
• IOST (IOST)
• Enigma (ENG)
• OmiseGo (OMG)

9) Infrastructure:

Certain blockchains offer their service to an organisation for building private blockchains. These institutions can use their tokens to access the service provided by these blockchains. 

• Ardor (ARDR)
• Insolar (INS)
• NULS (NULS)

10) Energy Sector:

Power Ledger (POWR) wants to build a decentralized energy market where energy resources can be shared among each other by utilizing the POWR tokens.