The rapid growth of the Internet of Vehicles (IoV) requires effective methods for confirming users’ identities and validating transactions across decentralized networks. This study introduces a smart authentication system that uses blockchain to improve security, privacy, and scalability in the IoVs environment. When you combine blockchain records with AI’s ability to guess the scheme, you get identity confirmation security that changes based on risks and privacy-focused authentication. Smart contracts directly enforce authentication regulations within the network, while Decentralized Identifiers (DIDs) handle user identities. Like anomaly detection systems, artificial intelligence processes data. These systems evaluate things including geographic locations and login behavior. Particularly in cases of high risk, the proposed scheme dynamically allocates risk ratings, hence allowing multi-factor authentication (MFA). The proposed scheme additionally makes use of Merkle Trees and Zero-Knowledge Proofs (ZKPs) to ensure private and effective user verification. The result shows that the proposed scheme achieves a lower communication overhead of 1792 bits, resulting in a lightweight computation cost of 5.12 ms as compared to the existing scheme. It’s very safe because it has two levels of authentication, is driven by AI which evaluates risk, and uses blockchain to verify identities. This makes it suitable for IoV environments.