Place chicken pieces in a large bowl or ziptop bag. Cover with buttermilk, 1/4 cup hot sauce and stir in salt, pepper and garlic powder and marinate 2 hours to overnight (this is optional but definitely recommended).
Remove from buttermilk and pat dry with a paper towel. Sprinkle lightly with salt, pepper and garlic powder. Set aside.
Place a rack over a rimmed baking sheet and set aside. Whisk together the eggs, water and hot sauce. In another bowl, whisk together the flour, salt, pepper, paprika and cayenne pepper.
Dredge the chicken in the flour mixture then coat it in the egg mixture. Return to the flour mixture and coat. Place chicken on the rack. Once all pieces are coated, place in the refrigerator for 30 minutes. This step helps the coating stick to the chicken.
Meanwhile, heat the peanut oil to 350 degrees F. Working in batches, fry chicken for about 15 to 18 minutes, or until no longer pink and cooked through. Keep in mind that dark meat will take a little longer to cook than white meat. Watch the wings as they may cook in less than 15 minutes. Place chicken on a clean rack to help keep it crispy as you cook another batch.