I would try the puppy pads, definitely. IMO, if you want to designate that blanket as his potty, then you're doing a great job and doing the right thing I think. Your baby is at the perfect age to learn. Not sure I personally would want that as his potty area (a blanket) but of course that is up to you I think.
I wouldn't think it would be too much different for him to learn the pads though as opposed to the blanket. But keep in same area and keep him confined as he grows and learns. Read more of the posts on here, they are very helpful too. I've noticed many start their pups in a cage with a potty area on one side and food/bed in a little area on the other. Beyond that I don't know. That's where I am stuck! LOL
I replied to you since you replied to me. Again best of luck. Puppies are so fun but do take some work. And you seem to be doing a great job, mama!