Preheat oven to 350°F. Butter two 8-inch round cake pans.

In a medium bowl, whisk together the all-purpose flour, baking powder, baking soda, and salt. Set aside.

In a saucepan over medium heat, combine the water and granulated sugar. Simmer until the sugar dissolves completely. Remove the pan from heat, add the unsalted butter, and allow it to cool.

Once the sugar mixture is chilled, mix in the vegetable oil, vanilla extract, and the scraped vanilla bean or vanilla bean paste. Beat in the eggs one at a time, ensuring each is fully incorporated before adding the next. Gradually whisk in the dry ingredients until you achieve a smooth batter.

Divide the batter evenly between the two prepared cake pans. Bake in the preheated oven for 25-30 minutes, or until a toothpick inserted into the center comes out clean. Let the cakes cool completely on a wire rack before frosting.

In a large bowl, beat the room temperature butter until it is light and fluffy. Gradually add the powdered sugar, one cup at a time, beating well after each addition. Mix in the vanilla extract and 2-3 tablespoons of heavy cream, half-and-half, or milk until the frosting reaches your desired consistency.

Place one cake layer on a serving plate and spread a generous amount of vanilla buttercream on top. Place the second cake layer on top and apply a crumb coat of frosting. Chill the cake for about 15 minutes to set the crumb coat. Apply the final layer of frosting and decorate with rainbow sprinkles if desired.