Folding pieces of paper and dollar bills is an old pastime for many children. According to "Money Origami Kit: Make the Most of Your Dollar" by Michael LaFosse, "money folding activities are a great way to have fun...and are a creative and fun way to give a cash gift or tip." While there are several ways to fold a dollar bill that verge on origami, if your goal is to get the smallest final product you can (with just simply the dollar bill itself) there is really only one way. Because of the dimensions and thickness of a piece of U.S. currency (a dollar bill or any other denomination) the paper can only be folded over itself so many times before it becomes impossible to proceed.
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Lay the dollar flat on a table or another stable surface. You can use a worn dollar bill if you choose but a fresher one will allow you to see the product of your folds better.
Fold the dollar bill in half lengthwise. In other words, make the two upper corners where the digit "1" is displayed meet. Crease the middle once you've done this.
Fold the bill in half once again. This time fold the top half over the bottom half and crease it.
Take one side and fold it over the other lengthwise again. Crease it a couple times since the mass is becoming thicker with each fold.
Fold it lengthwise yet again (or vertically, it makes no difference at this point). Hold it tightly after you crease it to make sure that it stays in position.
Grip one side with your thumb and forefinger to bring it up over the other side. Hold it in place again for a minute or two. This is the fifth and final fold giving you the smallest way to fold a dollar bill.
There are several variations on this folding technique but all end up with the same product.
You can substitute vertical folds for lengthwise folds at any point and the result will be the same.