Like coin grading, currency is valued by its date and mintage, rarity, and condition. The currency grading system assigns grades (Poor 1- Perfect New 70), based on the note’s condition. Some factors are easily determined (e.g. number of folds, centering of the images and broadness of margins). Others require years of experience in assignment of the grade: corner bends, pinholes, handling marks, smudges, ink marks, stains, tears and splits. Is the banknote truly in its original condition? If so, paper waves and a slight raise in the ink due to embossing should be evident.
To get a grip on the history of US currency, check out these two sites: https://uscurrency.gov (US Currency Education Program) and http://www.moneyfactory.gov/uscurrency/history.html.