Cut a 2-inch round from the center of the bread, reserving the round. Melt a nut size bit of butter in a small nonstick skillet over medium heat. Place the slice of bread and the round in skillet and toast lightly, about 1 minute. Crack the egg into the hole and season with salt and pepper, and cook until golden brown, about 2 minutes. Add remaining the rest of the butter as needed to brown and crisp the toast. Flip the egg and round, season with salt and pepper. Cook another 2 minutes for a runny yolk, or slightly longer for a set egg.
Transfer egg-in-the-hole to a plate and sprinkle with paprika, if desired. Serve and use the toasted round for dipping into the yolk.
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