At this point it's important to clarify that Canada has a dollar coin, not a dollar bill. And it's a real dollar coin, not like the Sacagawea and Presidential coins that they have been trying and failing to make commonplace in the United States. In Canada the one dollar bill has been taken out of circulation and replaced with a coin. The two dollar coin becomes even more amazing to Americans, who don't even have a two dollar bill.
The Canadian dollar has a picture of a loon on the back and thus Canadians have taken to calling it a "Loonie." Despite the ridiculousness of the name, it actually makes sense. It doesn't do much to raise the world's opinion of the often-ridiculed Canadian dollar, but it makes sense.
And Canadians like the loonie. They like it so much that the two dollar bill was also replaced by a coin. And that coin became known as the "Toonie." It initially had other names, such as the "Doubloon," but "Toonie" seemed to stick. A "doubloon" sounds like something pirates would search the seven seas for, so I guess Canadians made the right choice. Of course, the spelling is debatable. Some would say it should be spelled "Twonie," like the number two, but that might bring legitimacy to the strangely named currency, so instead it's named "Toonie." It could be worse. They could have spelled it "2nie" like "2Pac" if they were aiming to capture the gangsta rap feel of the mid-90s when the coin was released. And don't think that Canadians are above naming things after fleeting trends. Look at the Toronto Raptors.
The strangely-named money is loved by Canadians, who are very quirky by nature. Having one and two dollar coins has also helped the nation's famed strip clubs, as the smallest bill you can shove down a woman's g-string is now a five. Sure, you could try sliding a loonie in there, but you'd probably look like a cheapskate and be openly mocked by the strippers and men cheating on their wives inside the club. Plus, no one likes to have their underwear filled with change. Not even homeless people. Believe me, I've tried it.
So if you're trying to determine if someone is Canadian, ask them if they have change for a five. If they whip out a combination of loonies and toonies, they're Canadian. If they start fumbling through bills, they're American. If they give you two nickels and a dime, they either can't do math or they're ripping you off. If that's the case you'll need to conduct further testing to find out if they're Canadian.