Chad

Uncertain; predates the Chadless punch (see the Snopes article on this supposed origin); possibly from the English slang term chat, "louse". The etymology Scots chad, "river gravel" previously given in some dictionaries is now thought to be nothing more than guesswork.

William Safire, 'The Right Word in the Right Place at the Right Time'', p. 43, Simon and Schuster, 2007 ISBN 1416587403.

Full definition of chad

(countable and uncountable; plural chads)

(uncountable) Small pieces of paper punched out from the edges of continuous stationery, punched cards, paper tape etc.

2000, Barbara and David P. Mikkelson, Snopes.com, "Urban Legends Reference Pages"The keypunch wasn't named after a Mr. Chadless; it was so named because, as expected, it punched tape while producing little or no chad.

1939 Ross A Lake, U.S. Patent 2,255,794, filed May 20, 1939"Prior devices ... have been arranged to cut out the perforations completely ... thereby producing chads or waste material which often present difficult problems of disposal."http://www.freepatentsonline.com/2255794.pdf
1959, J. W. Freebody. Telegraphy.The small hinged discs of paper, called â€˜chadâ€™, remain attached to the body of the tape.
2000, Supreme Court of the United States (per curiam). Bush v. Gore.Much of the controversy seems to revolve around ballot cards designed to be perforated by a stylus but which, either through error or deliberate omission, have not been perforated with sufficient precision for a machine to count them. In some cases a piece of the cardâ€“a chadâ€“is hanging, say by two corners. In other cases there is no separation at all, just an indentation.