"To set up a bidirectional payment channel, both parties involved must first agree on an opening transaction. This opening transaction determines how many bitcoins each deposits into the channel.
Let's say Alice wants to send one bitcoin to Bob. Since Alice and Bob expect to transact more frequently, they decide to open up a bidirectional payment channel, and use this to send the bitcoin. (Sending a whole bitcoin is probably a lot for a payment channel, as these might be more useful for micropayments – but it's perfectly possible.)
To open the channel, Alice and Bob each send five bitcoins to a 2-of-2 multisig address. This is the “opening transaction.” Bitcoins can only be spent from this address if both Alice and Bob sign a subsequent transaction.
Additionally, Alice and Bob both create a secret (a string of numbers), and exchange the hash.
Alice now immediately creates a subsequent transaction from the opening transaction. This is a “commitment transaction.” With the commitment transaction, Alice sends four bitcoins to herself, and six bitcoins to a second multisig address. This second multisig address is a bit funky. It can be unlocked by Bob on his own, but only after 1000 extra blocks have been mined after it’s included on the blockchain; it includes a CSV-lock. Or, it can be opened by Alice on her own, but only if she also includes the secret for which Bob has just now given her the hash. (Of course, Alice has no idea what this secret is – she only knows hash – so there's no way she can make use of this option right now.)
Alice signs her end of this commitment transaction. But she doesn't broadcast it! Instead, she gives it to Bob.
Meanwhile, Bob does the same, but mirrored. He creates a commitment transaction as well, from which he sends six bitcoins to himself, and four to a funky new multisig-address. Alice can unlock this address if she waits an additional 1000 blocks, or Bob can unlock it with Alice using her secret.
Bob signs this half, and gives it to Alice.
After all this exchanging of “half-valid” commitment transactions and hashes of secrets, they both sign and broadcast the opening transaction, to make sure it's recorded on the blockchain. The channel is now officially open.
At this point, both Alice and Bob could sign and broadcast the half-valid commitment transaction they got from the other. If Alice does, Bob gets six bitcoins immediately. If Bob does, Alice gets four bitcoins immediately. But whomever signs and broadcasts the transaction will have to wait 1000 blocks to unlock the subsequent multisig-address, and claim the remaining bitcoins."
Edit: Copied from
https://bitcoinmagazine.com/articles/understanding-the-lightning-network-part-building-a-bidirectional-payment-channel-1464710791/ 
