An attacker claims that they have been monitoring the victim's computer activity, including enabling their computer's camera to record them while they were visiting pornographic sites. The scammer then demands a Bitcoin payment in exchange for NOT exposing the victim's computer habits to the world. This is a lie and the attacker does not actually have what they are claiming to have. Sometimes the attacker will include a password that the victim has used at some point in the past which was obtained through an unrelated breach and used in order to trick the victim into believing the lie about the webcam video.
Claiming to have access to your webcam is a common scam
This scam is very common and routinely gets sent to people who do not even have a webcam on their computer. Attackers are hoping that you do have a webcam (and do visit adult web sites), so that it is more believable, but it is a lie. You should never pay the attacker in response to this scam, and you can safely ignore a message like this one.
Including one of your old passwords is a trick to get you to believe the lie about your webcam
Passwords are routinely exposed in major site breaches. If an attacker can find a password you used at some point in the past, they might include it when employing this scam. They know that if they can trick you into thinking they "hacked" your password, you're more likely to believe that they also hacked your web cam or browser history. In this case, it is a lie. The password included in this message was exposed through an unrelated breach event. If that's still your password on any service, you should change it! But the claims being made about your browser history and web cam are lies, and you can ignore this message. Do not pay the scammer!