Reversible data hiding has emerged as a crucial and dynamic area of research, driven by the proliferation of online data transfers involving images, videos, and audio files over the internet. As these digital assets traverse various platforms and networks, the need to embed additional data within them while maintaining their integrity becomes paramount. However, the process of embedding data into images is inherently challenging, as it often leads to distortions and quality degradation, impacting the overall user experience. To address this challenge and minimize the distortion caused by data embedding, guided filtering, a powerful image enhancement technique is harnessed to achieve this edge-preserving smoothing. By adopting this approach, the deleterious effects of data embedding on image quality can be successfully mitigated. In addition to the image enhancement aspect, ensuring the security of the embedded data is important. Blockchain technology has been integrated into the proposed system. This incorporation of blockchain adds an extra layer of protection to the encrypted image data, preventing unauthorized access, tampering, or data breaches. The efficacy of the proposed RDH system is rigorously evaluated using a suite of metrics. Peak Signal-to-Noise Ratio and Structural Similarity Image Metrics are employed to measure image quality. Furthermore, the system’s performance is assessed in terms of its embedding capacity, which indicates the amount of data that can be seamlessly embedded per unit of image space. The embedding capacity of 1 bit per pixel is easily achieved with PSNR greater than 35 dB. For encryption evaluation, parameters like the Number of Changing Pixel Rate and Unified Averaged Altered Intensity are employed for the assessment the encryption strength and resilience against attacks.