Adblocking Solution?
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I am looking for a hardware based solution that only blocks ads and spam. I am thinking a full blown pfsense install with squid/squidguard is the solution. Is this the way to go or should I get a dedicated squidbox? Please recommend hardware specs.
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SquidGuard won't block spam. For that you'll need something like a mail server with SpamAssassin.
As for hardware spec - take a look at the recommended hardware list found from the front page of the pfSense main site. What you'll require will depend entirely on your situation, which you've said nothing about. Key points will include:
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Peak bandwidth (upload and download)
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Peak packets per second (upload and download)
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Number of users
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Type of typical web browsing activity
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Peak email rate
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Peak email size
A little bit of searching in the hardware forum will show you a few dozens of threads on the subject.
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