Blood Seals are a completely different kind of upgrade to the system used by Upgrading Stones. Blood Seals

add additional bonuses to
weapons and armor. The bonuses vary depending on the weapon type and the piece of armor that is being blood sealed. The bonuses can also vary in level, though this is a luck system rather than a known factor.
Acquisition of Blood Seal Gems

To Blood Seal
weapons and armor, you will need Blood Seal Gems. These gems can be purchased from the general merchant in most towns such as
Merchant Geres in Randol. Blood Seal Gems cost 1,000 Gold each from NPC merchants. Be wary of player merchants selling Blood Seal Gems as they often charge more, hoping to catch a new player unaware of the cost from NPC merchants.