Prep the potatoes: Peel and cut into medium-sized cubes.
Render the bacon: In a heavy pot, slowly cook the bacon until it releases its fat and begins to crisp lightly.
Sauté the onions: Add the onions to the bacon fat and cook until soft and translucent.
Bloom the spices: Reduce heat and stir in the sweet (and optional hot) paprika along with the caraway seeds—this gently blooms their aroma and prevents bitterness.
Simmer the potatoes: Add the potatoes, stir to coat, and cover with water or broth. Add the bay leaf if using.
Cook gently: Simmer for 20–25 minutes until the potatoes are tender and the liquid has thickened slightly.
Finish: Season to taste with salt and pepper. Stir in a spoonful of sour cream for extra richness, if desired.