Do not pay! There is no "hacker" on your computer nor do they have any information on you. If you want to learn more like how they got your password or other info, watch Jim's videos and check out the Have I Been Pwned database.
Put simply, scammers purchase database 'dumps'/lists from breached websites. Quite often these websites stored the password used in plaintext or an easy to reverse encryption. While this is unlikely to happen these days, it has been seen in the past.
It is important to try to use a different password accross different websites, that way if one is breached, your password isnt compromised across all your accounts. 2FA (or MFA) is also a good method of preventing access to attackers even if they discover your password.
There are a few rules you should follow to remain safe online: Don't share personal information to people you don't know or trust. Use tools like a VPN, adblocker, password manager, antivirus etc. In short, don't immediately trust everything you see online. Always doublecheck URL's and emails before clicking, logging in and responding. Phishing is a massive threat to security, much larger than hacking.
Phishing is the use of what appears to be a legitimate web form or email to capture personal or login information from a user. For example a page may look like it is logging into outlook or gmail, but is hosted on a fake website (ie. www.gmail.com.fakesite.ru/login). The point of this is that it keeps a copy of the data you submit and then forwards you to the real website so it looks like you just mistyped a character. Most people who fall for this don't even realize it.
A VPN (or Virtual Private Network) secures all data transmitted between the internet and your device by encypting it between you and a remote server that acts as your browser. If you are on an insecure connection (like a free wifi hotspot, hotel wifi etc) then attackers could otherwise "sniff" the passwords that you type in to insecure websites. Using a VPN will encrypt those details so that the attacker can't get at your passwords and information.
VPNs also offer significantly more anonymity as they generally show you as being in a different country or region, making it more difficult (although not impossible) for websites to track your movements. VPNs do not protect you from being phished or from malicious files. You must still take care about websites you visit and files that you download.
A few good VPNs are NordVPN, Cyber Ghost and Windscribe.
In short, it's a type of VPN that goes through three servers instead of just one. People often say Tor is only used for nefarious purposes. People also say that Tor is completely anonymous. Both of these are false, and if you are just signing into Facebook etc, then a VPN will do. For more on Tor, check this video out: https://www.youtube.com/watch?v=6czcc1gZ7Ak.
To keep it very basic, an IP address is a 'unique' address assigned to your network. It's the same as the address on your letter box when coupled with your street and postcode/zipcode. Most users' IP addresses are randomly rotated by their internet provider, so the IP address isn't really 'yours'.
Yes, but actually no.
An IP address can give away your general location depending on your service provider's configuration. For example an IP address can actually lead back to surrounding suburbs close to the destination. But actually, even if it leads to your specific suburb - that information is mostly useless. There is no way to get an exact location from an IP address alone - they would need access to your service providers IP Assignment history and these are scammers... not hackers.
Many scammers will however use an IP address, or the general location that it leads to, to encourage fear in their victims. To the unknowing, it can be scary to be told roughly where you live.