In the past few decades, Intelligent Transport System (ITS) has gained the popularity in smart society. Global automotive stakeholders such as Google, Uber, and Toshiba are the driving force in that and also looking for the interconnection of autonomous vehicles (AVs) for road traffic management, that is, connected AVs (CAV). CAVs are vulnerable to various safety and security issues, for instance, denial-of-service, global positioning system (GPS) spoofing, man-in-the-middle, and timing attacks, which raise serious concerns for their development in application specific areas. Although many solutions exist in the literature, most of them are focused on centralized systems, which is having a single-point-failure. In light of the above facts, we analyze and classify the security and privacy issues in CAV and proposed a solution taxonomy in this article. We emphasized the defense mechanism for these attacks on the CAV system along with their enactment on issues and discovered how emergent blockchain technology could handle it. Furthermore, we proposed a blockchain-based secure and decentralized CAV architecture to mitigate security and privacy issues such as denial of service, man-in-the-middle, hijacking, GPS spoofing, and replay attacks. Finally, we reconnoiter the open research challenges associated with the blockchain-based CAV system. To validate the efficacy of the proposed system, a real-time case study on smart city integration over edge computing using computation and communication costs is proposed in this article.