I have a fast internet connection (DSL/cable) - can I just host my own site?

You could, but that's definitely not recommended. First of all, most ISPs have clauses that do not allow you to use your internet connection for web hosting - doing so will result in termination of your account. Secondlyl, think of the headaches it can provide: making sure your system is secure so that no one can hack into it, having your computer on 24/7, and other such problems. Thirdly, think of the performance. Most good web hosts use powerful servers with lots of RAM and high performance hard disks. Furthermore, they have multiple internet connections at speeds far higher than a residential DSL or cable service can provide. Lastly there are all the issues of support. If something goes wrong, it will be your job to fix it - you will not have a professional to correct the problem.

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