In order to upgrade the Blood Altar to Tier 3 you will need 20 runes, these can be blank or any of the previous runes that were available. These runes can be replaced a little later on so opting for blank runes, for now, will get the job done. You will also need 4 blocks of glowstone or 4 sea lanterns, either work.
The blocks below the pillar can be anything they will not affect the Altar, also the 2 blocks below the glowstone can be anything as they also do not affect the Altar. Make sure you use your Divination Sigil to double-check you have built the altar correctly.