Quarter the potatoes and boil until tender.
Add cut bacon to a saute pan and cook until crispy. Drain 1/2 - 3/4 of the grease out of the pan. Be sure there's still some left, at least a couple of tablespoons. Add 1 cup of water, the vinegar, and sugar. Heat on low and let simmer. The sugar amount is to personal preference. I usually start with about 1/2 a tablespoon then add more slowly until I get a sweet / sour flavor I like. Add salt and pepper to taste. Turn up the heat and bring to a boil.
While the sauce is cooking, in a small bowl add 1 cup of cold water and then mix with 3 - 4 tablespoons of cornstarch (don't use hot or warm water as it will expand before you are ready to use it). Mix with your fingers until it feels smooth and silky.
When the sauce comes to slow boil, restir the cornstarch and slowly pour it into the hot sauce while using a whisk to briskly mix it in and not create lumps. Keep adding the cornstarch until the sauce thickens (until about a little thinner than the consistency of a beef gravy). Be sure to add it slowly so the sauce thickens slowly. If you add it all at once, you'll have a sweet and sour pudding.
Remove from heat and add warm potatoes to the sauce a little at a time and gently toss to coat. Add sliced chives and mix. Serve immediately while hot, or refrigerate and serve cold.