Answer: It's usually best to start plants in a sterile medium -- to reduce the chances of "damping off". Damping off is caused by a soil-borne fungus; some of your soil components like the compost may not be sterile. You want to keep the soil blocks evenlymoist, but neither wet nor dry. It's a good idea to place the blocks in the baggies until the plants sprout, but you might want to take them out as soon as the seedlings emerge. You'll just have to keep a closer eye on them so they don't dry out. You can water tiny seedlings by spraying gently with a mister/spray bottle. Your soil mix sounds quite rich, with both blood meal and compost. You might try using a sterile soilless mix for sprouting your seedlings, and save the other mix for transplanting the seedlings once they are several inches tall and less prone to damping off.
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