Before diving into cooking, ensure your kitchen is tidy. Gather all your ingredients and equipment, including a large pot or Dutch oven, cutting board, knife, and an immersion blender (or regular blender).

Peel and cube the potatoes into roughly 1-inch pieces.

Finely chop the yellow onion and mince the garlic.

In your large pot or Dutch oven, melt the butter over medium heat. Add the chopped onion and cook until softened and translucent, about 5-7 minutes. Stir occasionally, then add the minced garlic and cook for another minute until fragrant.

Add the cubed potatoes to the pot. Pour in the chicken broth and water, and stir in the salt, black pepper, smoked paprika, and cayenne pepper if using. Bring to a boil, then reduce heat to low, cover, and let it simmer for about 15-20 minutes, or until the potatoes are very tender.

Once the potatoes are cooked and tender, remove the pot from heat. Using an immersion blender, blend the soup until smooth. If using a regular blender, carefully blend in batches.

Return the pot to low heat. Stir in the heavy cream and sour cream, mixing gently until well combined. Heat lightly, taking care not to boil the soup.

Taste the soup and adjust the seasoning as needed.

While the soup simmers, cook the bacon until crispy and crumble it into small pieces.

Ladle the hot potato soup into bowls. Top each serving with crumbled bacon, shredded cheddar cheese, and chopped green onions.