According to this article, some very expensive art pieces are going to be auctioned, and "the auction will be conducted on the Ethereum blockchain. A smart contract will determine the final price for Warhol’s painting".
If I understand correctly, the smart contract collects the money from all bids, calculates the maximum bid, keeps the money from that bid, and returns all other money to the losing bidders (is that correct?).
What I do not understand is the final paragraph: "At a recent convention in London, the co-founder of blockchain identify company Codex Protocol, Jess Houlgrave, stated that over 40 percent of all art pieces on the market are fraudulent. In this regard, blockchain’s benefits immediately come to mind – specifically the maintenance of traceable records on a public database that art collectors can view to verify their pieces."
How can the blockchain say anything about a certain fungible piece of art? How can the blockchain prevents the owner of a real artwork from replacing it with a fake artwork and selling the fake as real?