The short answer to whether no-follow links are valuable is: YES!
And what is my proof?
Google themselves have said they give value to nofollow links in this post on their official guidelines website:
As you can see Google now sees nofollow links as “hints” for which websites to give rankings to. More on this below.
How does Google handle nofollow links today?
Historically Google has treated nofollow links as “directives”. Essentially, this meant that Google disregarded all nofollow links, determined that they do not affect the website’s authority, and did not use them to influence the rankings of that website.
However, the March 1, 2020, Google Algorithm Update introduced changes to how Google handles the nofollow tag. Together with the addition of rel=”sponsored” and rel=”ugc”, Google now considers the rel=”nofollow” links as “hints”. In other words, contextual, high-quality links can still contribute to your web rankings.
To put it simply, currently, Google’s search ranking algorithms treat the nofollow attribute as a suggestion on whether any ranking credit should be passed to the linked website. Based on the quality of the link and the context it provides, Google can either count the link as a beneficial credit to the website, disregard it as a signal from the index altogether, or count it towards their spam signals calculations.
These changes mean that things are no longer “black and white”, and Google’s collecting even more signals from the web to determine the search result page’s rankings. In fact, as long as your nofollow links are contextually relevant and well-placed, they can even potentially be considered as dofollow links by Google.
However, you can most certainly assume that nofollow links appearing on thin, irrelevant pages are still considered fully “nofollow”. Consequently, they likely pass no beneficial value between the websites at all.
Can you rank #1 on Google only with nofollow links?
No it would be hard.
If you only had nofollow links you wouldn’t have a natural link profile. So that would be your biggest problem. Not the fact that the links are nofollow, but the fact that they are ALL nofollow.
Also the competition for some keywords has gotten really high. So having a great mix of both dofollow and nofollow links would be what you need to compete.
Having only nofollow links is rarely sufficient in achieving the desired rankings on some of these competitive keywords.
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To conclude, nofollow links are still valuable for SEO – and will be so for the foreseeable future. In essence, you should implement them as part of your link-building strategy. That is, even if you’re not actively reaching out to get nofollow links, you should not turn down contextual links marked with “rel=nofollow”.