The NoFollow tag is simply a tag added to a link to a website that tells the search engines to not count that link as important for the purposes of ranking the website.
The NoFollow link attribute (rel=”nofollow”) was originally created to stop comment spamming on blogs.
The idea is that if spammers are spamming in blog comments to get better SEO and links for their sites, NoFollow would render such spam useless.
NoFollow is no longer limited to blog comments. Wikipedia, digg, reddit, delicious and many more sites use NoFollow in some form.
How does Google handle nofollowed links? As Google’s site reports (http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer=96569), they do not follow them. This means that Google does not transfer Page Rank or anchor text across these links. Essentially, using nofollow causes us to drop the target links from our overall graph of the web.
Problems with Nofollow:
1. NoFollow is broken! Being the original intent of NoFollow to stop spamming, that has not worked. Other techniques to stop spamming should be used, ask a question or something.
2. There is no value to the user if the nofollow is applied. The link will not get rank value.
3. Maybe moderate comments more often to ensure the links add value.
4. Lack of understanding about what NoFollow means, leading to all links being NoFollow’ed, did you know Wordpress' defaults to nofollow, so many blogs have it turned on without even knowing.
5. Commenting on a blog post is the same as adding more relevant to that blog post. A thought provoking one sentence post can lead to pages of comments. If someone takes the time to help build your site’s content via posting comments, it is professional courtesy to give them some link love.
6. Wikipedia no following is just bizarre to me, isn’t that the point of an encyclopedia? Link to valuable information and promote that information?
7. Breaks links between websites, seems like a bad idea as it is the World Wide Web?
8. Once people understand the NoFollow tag, it discourages interaction with your site if they know they will not get any value.
Sites like Papble.com do not use NoFollow. We like interesting websites and want to promote your content.