A knot has this advantage: you can untie it to re-varnish.  If you are using the disappera-into-the-hull type bungee I suppose you could tie the knot under the deck, so above deck would be nothing but smooth bungees.  I used a water knot, though a double fisherman's knot is standard.  

The slickest method I've seen is the one described by Joe Greenley of Redfish Kayaks.  I've used it, and years later the bungees are still holding.  Here's a link to a post where he describes his technique:

http://www.kayakforum.com/cgi-bin/Building/Archive50.pl/noframes/read/54933

Ross

You can get some plastic (nylon maybe) hooks from West Marine that clamp onto bungee.  I put a hook on each end and hook them together.  It looks great.

Paul G

I agree with Ross. I glued the bungies and that was five years ago for one boat and four years ago for the other. this year I am refinishing both boats and I will just cut the bungees and replace. It is time now that the UV has started to takes measure.