They take old hacked passwords (mine was from a credit card account) and send these out. I have checked the bitcoin block chains, and people do fall for this scam.

I do not have a camera on my computer, so they can't really see the pleasure I derive from playing Hearts on the machine. Needless to say, I have never responded to the scam, and I have never heard of any so-called videos of me being spread among my contacts.

I have learned one other thing, though: don't bother responding to the email, since they hijack the accounts of other people