In a large Dutch oven or large pot, cook bacon over medium heat until crisp, about 7 minutes. Using a slotted spoon, transfer bacon to a plate, leaving fat in pan.
Season beef with salt and black pepper. In batches, add beef to pot, and cook in bacon fat over medium-high heat until browned all over, about 5 minutes per batch. Using a slotted spoon, transfer beef to plate with bacon.
Add water and onions to pot. Cook, stirring and scraping up browned bits, until all liquid is evaporated and onion is softened, about 6 minutes. Add paprika, tomato paste, and caraway seeds; cook, stirring, for 1 minute.
Add water and apple cider vinegar; return the meat and any accumulated juices to the pot. Bring the goulash to a boil, cover partially, and simmer over low heat for 1½ hours.
Add potatoes and bell pepper to pot, and simmer, over low heat until beef is tender and sauce is slightly thickened, about 1 hour.
Stir in apple cider vinegar. Season with salt and black pepper. Serve with a dollop of sour cream.