This work introduces new algorithms with multi-factor identity authentication and Byzantine Fault Tolerance for the enhancement of security in blockchain. The proposed model utilizes Aadhaar, PAN Card, and Driver’s License, which are securely hashed using SHA-512, thereby providing unique digital identities for user authentication. There is a new cryptographically secure key generation algorithm to facilitate secure node-to-node communication through session-specific tokens. Besides, BFT algorithms detect and isolate cheating nodes to maintain the ability to reach consensus with attackers. Security analysis of this proposed system has shown great entropy (7.04) and a large Hamming distance of 360 for the final value of the blockchain. With such results, the proof that the system increases blockchain hardness, stability, and resistance against identity theft or unauthorized access and tamper resistance is achieved.