PageRank, in simple English, works something like this. Google assigns a fixed number of points to a page that are then equally divided among the other pages that are linked from that page.

For example, assume that Google has assigned a web page 100 points and there are 5 hyperlinks on that page. Each of these pages will therefore get 20 points from Google. If two of these hyperlinks are written using the rel=nofollow attribute, Google won’t give them any points but the remaining three pages will still get 20 points each as before. The balance 40 points (100 – 20*3) are lost.

Update: Google has updated their algorithms and you can no longer save the page rank juice by nofollow-ing your links. Taking the above example, if you rel=nofollow 2 links, the remaining 3 links will still get 20 points only.

So should you use the nofollow attribute at all in your internal links? Google’s webmaster site recommends the use of nofollow in some scenarios:

Search engine robots can’t sign in or register as a member on your forum, so there’s no reason to invite Googlebot to follow “register here” or “sign in” links. Using nofollow on these links enables Googlebot to crawl other pages you’d prefer to see in Google’s index.

This stand is however completely different from what Matt Cutts has suggested in one of his recent videos (embedded below).

Matt has unequivocally advised that web publishers should not use rel=nofollow when linking to any of their internal pages even if they don’t want to see those pages in search engines.

He didn’t share any specific reason that made Google to change their original stand on the use of nofollow in web pages but, as a publisher, what matters more to us is the current recommendation which is ” no nofollow on internal links.”

Related: Google Experts Answer your SEO Questions