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Nofollow tag and its effect on Page Rank of a website

Nofollow tag is an attribute in html which tells the crawler of search engine, not to consider any particular link as a back link. Nofollow tag is followed by that particular link, in its html code.
On June 2009 Google announced that it would no-more consider links followed by nofollow attribute as back links. This decision was taken due to fact that a lot of webmasters were taking benefits of Page Rank transfer by the use of paid-link campaigns services.
As we know that back links (links of any website on other websites) have considerable weight age in Google’s search algorithm. More links you have more better it is. Moreover all links are not given a same value. Rather their value is determined by the reputation of website on which the link is placed. That means better the rank of the website hosting the link, more benefit the guest website will receive.

Considering this, many webmasters thought this as a way to improve the Page Rank of their websites. A lot of people started selling links on their websites having higher Page Rank. This helped in boosting the PageRank of linked website. If this was left going on, it would have a crashing effect on search quality of Google. This phenomenon was latter came to be known as Page Rank Sculpting.
Webmasters simply put nofollow attribute for any link they wanted. This allowed the up rise of Page Rank of linked website without soaring out Page Rank of website on which the link was placed. This is because in Google search algorithm as incoming links to any website are considered Page Rank boosting, likewise out Going links are supposed to soar the rank of hosting website.
To abandon this practice, Google disclosed that it would no-more consider links with nofollow tags, as back links. This eventually led to Page Rank vaporization.
Many websites like Wikipedia also uses this same method to stop link spamming and to avoid Page Rank sculpting. Out-going links from Wikipedia are not given a status of back link for any website. This was mainly done due to the universally allowable editing structure of Wikipedia.
Most of the word press blogs also set the status of links presented in comments, as nofollow. This would otherwise give the links in comments, the status of back links, which may otherwise soar the rank of host blog.