It couldn't replace the DRM, just the license check. Some DRM spyware from the publisher will still have to check if you can prove ownership via the blockchain instead of checking a CD key against the publisher's license server. If you can't, it will refuse to launch the game. Someone will crack the game and provide a DRM-free experience that is better.
It doesn't, except that I guess the publisher doesn't have to run a license server. IMO this would be better achieved by simply not having a license check, at least on some terminal version after which no updates will go out.
