Ah, the hanging chad! It seems just yesterday that it was on everyone’s lips, now fallen back to that obscurity whence it arose. ‘Origin unknown’ says the OED curtly, and stays not to speculate. But where the OED fears to tread folk etymology steps boldly in, with its usual flair for invention.
There is a charming folk etymology: that there was a kind of punch that made U-shaped slits rather than holes, and it had been invented by a Dr. Chadless, so chad was what a Chadless punch did not create. This is, sadly, a better example of geek humor than of word history. No one named Chadless is in the US or UK patent databases, or even in the LDS Church family history records.
From a short article by Harry R. Lewis, Gordon McKay Professor of Computer Science and Dean of Harvard College.
Chad, and chadless, first break cover in 1959 (both cites are from the same work):
J. W. FREEBODY Telegr. xi. 460/2 The small hinged discs of paper, called ‘chads’, remain attached to the body of the tape.
J. W. FREEBODY Telegr. xi. 460/2 In order..that the printed characters are completely legible, the tape is perforated by the chadless method.
One wonders if there’s a possible connection with Mr Chad, “The figure of a human head appearing above a wall, etc., with the caption ‘Wot, no - ?’, as a protest against a shortage or the like.” First cite for this is 1945:
1945 Sunday Express 2 Dec. 2/3 What is the origin of that peculiarly laughable figure called Chad we see so often scribbled across our walls?
The origin for this too is ‘obscure’, and it does seem to be a British usage whereas the former looks to be American in origin, so I suppose a connection is unlikely. But still, hanging from a computer printout and hanging over a wall? I know, I’m reaching here, but that’s half the fun of speculation!